McGrath Announces Results for Second Quarter 2025

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 for the quarter ended June 30, 2025 of $235.6 million, an increase of 11% compared to the second quarter of 2024. The Company reported net income of $36.0 million, or $1.46 per diluted share, for the second quarter of 2025, compared to net income of $20.6 million, or $0.84 per diluted share, for the second quarter of 2024.

SECOND QUARTER 2025 YEAR-OVER-YEAR COMPANY HIGHLIGHTS:

• Rental operations revenues increased 5% to $163.5 million.
• Sales revenues increased 28% to $69.8 million.
• Total revenues increased 11% to $235.6 million.
• Income from operations increased 5% to $57.2 million.
• Adjusted EBITDA¹ increased 3% to $86.5 million.
• Dividend rate of $0.485 per share for the second quarter 2025. On an annualized basis, this dividend represents a 1.7% yield on the July 23, 2025 close price of $115.05 per share.

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

“We were pleased with our second quarter results. The 11% increase in companywide revenues was driven by higher rental operations and sales revenues.

Modular rental revenues increased 5% compared to last year, with growth across both commercial and education customer bases, despite softer market demand conditions than a year ago. Given current utilization levels, we reduced new equipment capital spending and focused on preparing available fleet to satisfy new shipments which increased operating expenses for the quarter. Our modular services offerings contributed to growth, and our Enviroplex business had a strong quarter of new modular sales in the education market.

Demand conditions in Portable Storage showed some improvement compared to the first quarter, with rental revenues growing 5% sequentially, though down 5% from a year ago. Lower commercial construction project activity continued to make demand conditions challenging.

TRS-RenTelco had a strong quarter, with rental revenues up 7% over last year. Consistent with the first quarter, improvement in market demand conditions was broad-based across customer segments.

We were pleased with our execution in the second quarter and encouraged by several positive signs in the overall demand environment, despite some ongoing economic uncertainty. Overall, our outlook is incrementally more positive as we enter the second half of the year, and we remain focused on disciplined operational execution to make the most of the market opportunities."

DIVISION HIGHLIGHTS:

All comparisons presented below are for the quarter ended June 30, 2025 to the quarter ended June 30, 2024 unless otherwise indicated.

MOBILE MODULAR

For the second quarter of 2025, the Company’s Mobile Modular division reported Adjusted EBITDA of $53.1 million, a decrease of $0.3 million, when compared to the same quarter in 2024.

• Rental revenues increased 5% to $81.9 million, depreciation expense increased 7% to $10.7 million, and other direct costs increased 13% to $24.0 million, which resulted in an increase in gross profit on rental revenues of 1% to $47.2 million.
• Rental related services revenues increased 11% to $32.2 million, primarily attributable to higher delivery and pick-up activities and higher site related services, with associated gross profit increasing 29% to $11.7 million.
• Sales revenues increased 13% to $40.5 million, due to higher new and used equipment sales. Gross margin on sales was 32% in 2025, compared to 38% in 2024, resulting in a 6% decrease in gross profit on sales revenues to $12.9 million. The reduction in gross margin on sales was primarily attributed to a higher mix of new versus used sales during the quarter.
• Selling and administrative expenses increased $3.5 million to $36.8 million, primarily due to a $1.7 million increase in employees' salaries and benefit costs, $0.9 million higher allocated corporate expenses and $0.7 million higher marketing and administrative expenses.

PORTABLE STORAGE

For the second quarter of 2025, the Company’s Portable Storage division reported Adjusted EBITDA of $9.8 million, a decrease of $1.2 million, or 11%, when compared to the same quarter in 2024.

• Rental revenues decreased 5% to $16.9 million, depreciation expense increased 4% to $1.0 million, and other direct costs increased 26% to $1.9 million, which resulted in a decrease in gross profit on rental revenues of 9% to $14.0 million.
• Rental related services revenues were $4.4 million and gross profit on rental related services revenues was $0.1 million, which was down from $0.2 million in the second quarter of 2024.
• Sales revenues increased $0.4 million to $1.7 million, primarily from higher used equipment sales. Gross margin on sales was 39% in 2025, compared to 43% in 2024, resulting in a $0.1 million increase in gross profit on sales revenues to $0.7 million.
• Selling and administrative expenses increased $0.1 million to $7.5 million in 2025, as compared to 2024.

TRS-RENTELCO

For the second quarter of 2025, the Company’s TRS-RenTelco division reported Adjusted EBITDA of $19.3 million, an increase of $1.3 million, or 7%, when compared to the same quarter in 2024.

• Rental revenues increased 7% to $27.1 million, depreciation expense decreased 14%, and other direct costs increased 9%, resulting in a 32% increase in gross profit on rental revenues to $11.9 million. The rental revenue increase was primarily due to the strengthening of end markets, resulting in higher average rental equipment on rent compared to the prior year.
• Sales revenues increased 32% to $7.7 million and gross margin on sales was 47% in 2025, compared to 54% in 2024, resulting in a 16% increase in gross profit on sales revenues to $3.6 million.
• Selling and administrative expenses increased $0.7 million to $7.3 million in 2025, as compared to the same period in 2024.

FINANCIAL OUTLOOK:

Based upon the Company's year-to-date results and current outlook for the remainder of the year, the Company is updating its financial outlook. For the full-year 2025, the Company currently expects:

		Previous	Current
•	Total revenue:	$920 to $960 million	$925 to $960 million
•	Adjusted EBITDA1, 2:	$343 to $355 million	$347 to $356 million
•	Gross rental equipment capital expenditures:	$115 to $125 million	$115 to $125 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 net cash provided by operating activities to Adjusted EBITDA 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:

McGrath RentCorp will host a conference call at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) on July 24, 2025 to discuss the second quarter 2025 results. To participate in the teleconference, dial 1-800-245-3047 (in the U.S.), or 1-203-518-9765 (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 1-800-839-5630 (in the U.S.), or 1-402-220-2557 (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.

FORWARD-LOOKING STATEMENTS:

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, regarding McGrath RentCorp’s expectations, strategies, prospects or targets are forward-looking statements. These forward-looking statements also can be identified by the use of forward-looking terminology such as “anticipates,” “believes,” “continues,” “could,” “estimates,” “expects,” “intends,” “may,” “plan,” “predict,” “project,” or “will,” or the negative of these terms or other comparable terminology. In particular, the discussion under the heading “Financial Outlook” is forward looking.

These forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties that could cause our actual results to differ materially from those projected including: the impact of the recent tariff actions and other economic factors; health of the education and commercial markets in our modular building division; competition within the modular business; the activity levels in the semiconductor and general purpose and communications test equipment markets at TRS-RenTelco; the activity levels in commercial construction projects and impact on Portable Storage segment; continued execution of our strategic performance improvement initiatives; our ability to successfully increase prices to offset cost increases; and our ability to effectively manage our rental assets, as well as the other factors disclosed under “Risk Factors” in the Company’s 2024 Form 10-K and other SEC filings.

Forward-looking statements are made only as of the date hereof and are based on management’s reasonable assumptions, however these assumptions can be wrong or affected by known or unknown risks and uncertainties. No forward-looking statement can be guaranteed, and subsequent facts or circumstances may contradict, obviate, undermine or otherwise fail to support or substantiate such statements. Except as otherwise required by law, we assume no obligation to update any of the forward-looking statements contained in this press release.

MCGRATH RENTCORP CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
		Three Months Ended June 30,								Six Months Ended June 30,
(in thousands, except per share amounts)		2025				2024				2025				2024
Revenues
Rental		$	125,985			$	121,176			$	246,098			$	241,508
Rental related services			37,483				34,358				71,399				63,938
Rental operations			163,468				155,534				317,497				305,446
Sales			69,775				54,414				108,701				89,483
Other			2,373				2,663				4,834				5,509
Total revenues			235,616				212,611				431,032				400,438
Costs and Expenses
Direct costs of rental operations:
Depreciation of rental equipment			21,426				22,165				42,931				44,531
Rental related services			25,477				24,990				49,790				45,776
Other			31,519				27,920				59,171				56,930
Total direct costs of rental operations			78,422				75,075				151,892				147,237
Costs of sales			46,480				34,121				71,990				56,518
Total costs of revenues			124,902				109,196				223,882				203,755
Gross profit			110,714				103,415				207,150				196,683
Expenses:
Selling and administrative expenses			53,543				49,003				104,412				99,467
Other income, net			—				—				—				(9,281	)
Income from operations			57,171				54,412				102,738				106,497
Interest expense			7,795				13,037				15,954				25,741
Foreign currency exchange (gain) loss			(81	)			31				(86	)			163
WillScot Mobile Mini transaction costs (Note 1)			—				12,367				—				21,721
Income before provision for income taxes			49,457				28,977				86,870				58,872
Provision for income taxes			13,484				8,359				22,689				15,406
Net income			35,973				20,618				64,181				43,466
Earnings per share:
Basic		$	1.46			$	0.84			$	2.61			$	1.77
Diluted		$	1.46			$	0.84			$	2.61			$	1.77
Shares used in per share calculation:
Basic			24,611				24,549				24,592				24,531
Diluted			24,618				24,560				24,620				24,562
Cash dividends declared per share		$	0.485			$	0.475			$	0.970			$	0.950

MCGRATH RENTCORP CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
		June 30,				December 31,
(in thousands)		2025				2024
Assets
Cash		$	1,469			$	807
Accounts receivable, net of allowance for credit losses of $2,866 at June 30, 2025 and at December 31, 2024			233,801				219,342
Rental equipment, at cost:
Relocatable modular buildings			1,443,314				1,414,367
Portable storage containers			244,261				240,846
Electronic test equipment			333,171				343,982
			2,020,746				1,999,195
Less: accumulated depreciation			(627,064	)			(611,536	)
Rental equipment, net			1,393,682				1,387,659
Property, plant and equipment, net			215,720				197,439
Inventories			12,297				14,304
Prepaid expenses and other assets			85,748				80,477
Intangible assets, net			51,919				54,332
Goodwill			332,373				323,224
Total assets		$	2,327,009			$	2,277,584
Liabilities and Shareholders' Equity
Liabilities:
Notes payable		$	572,525			$	590,208
Accounts payable			54,864				60,082
Accrued liabilities			118,177				113,961
Deferred income			125,389				109,836
Deferred income taxes, net			292,893				280,129
Total liabilities			1,163,848				1,154,216
Shareholders’ equity:
Common stock, no par value - Authorized 40,000 shares
Issued and outstanding - 24,612 shares as of June 30, 2025 and 24,551 shares as of December 31, 2024			115,891				116,253
Retained earnings			1,047,270				1,007,115
Total shareholders’ equity			1,163,161				1,123,368
Total liabilities and shareholders’ equity		$	2,327,009			$	2,277,584

MCGRATH RENTCORP CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
		Six Months Ended June 30,
(in thousands)		2025				2024
Cash Flows from Operating Activities:
Net income		$	64,181			$	43,466
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			52,739				54,131
Deferred income taxes			12,764				11,592
Provision for credit losses			826				873
Share-based compensation			5,322				4,556
Gain on sale of property, plant and equipment			—				(9,281	)
Gain on sale of used rental equipment			(16,674	)			(15,537	)
Foreign currency exchange (gain) loss			(86	)			163
Amortization of debt issuance costs			45				4
Change in:
Accounts receivable			(15,285	)			9,116
Inventories			2,007				(12,788	)
Prepaid expenses and other assets			(5,270	)			5,817
Accounts payable			(8,402	)			23,155
Accrued liabilities			2,403				166
Deferred income			15,124				23,196
Net cash provided by operating activities			109,694				138,629
Cash Flows from Investing Activities:
Purchases of rental equipment			(50,230	)			(145,345	)
Purchases of property, plant and equipment			(21,621	)			(30,125	)
Cash paid for acquisition of businesses			(21,947	)			—
Proceeds from sales of used rental equipment			32,200				29,334
Proceeds from sales of property, plant and equipment			—				12,251
Net cash used in investing activities			(61,598	)			(133,885	)
Cash Flows from Financing Activities:
Net payments under bank lines of credit			(17,730	)			(43,708	)
Borrowings under term note agreement			—				75,000
Taxes paid related to net share settlement of stock awards			(5,684	)			(4,082	)
Payment of dividends			(24,020	)			(23,435	)
Net cash (used in) provided by financing activities			(47,434	)			3,775
Net increase in cash			662				8,519
Cash balance, beginning of period			807				877
Cash balance, end of period		$	1,469			$	9,396
Supplemental Disclosure of Cash Flow Information:
Interest paid, during the period		$	15,982			$	26,394
Net income taxes paid (refunded), during the period		$	5,786			$	(4,599	)
Dividends accrued during the period, not yet paid		$	12,443			$	12,150
Rental equipment acquisitions, not yet paid		$	8,658			$	7,634
Business acquisition payments withheld		$	1,815			$	—

MCGRATH RENTCORP
BUSINESS SEGMENT DATA (unaudited)
Three months ended June 30, 2025
(dollar amounts in thousands)		Mobile Modular				PortableStorage				TRS-RenTelco				Enviroplex				Consolidated
Revenues
Rental		$	81,909			$	16,939			$	27,137			$	—			$	125,985
Rental related services			32,172				4,394				917				—				37,483
Rental operations			114,081				21,333				28,054				—				163,468
Sales			40,484				1,712				7,713				19,866				69,775
Other			1,423				301				649				—				2,373
Total revenues			155,988				23,346				36,416				19,866				235,616
Costs and Expenses
Direct costs of rental operations:
Depreciation			10,741				1,038				9,647				—				21,426
Rental related services			20,450				4,304				723				—				25,477
Other			23,990				1,918				5,611				—				31,519
Total direct costs of rental operations			55,181				7,260				15,981				—				78,422
Costs of sales			27,581				1,048				4,072				13,779				46,480
Total costs of revenues			82,762				8,308				20,053				13,779				124,902
Gross Profit
Rental			47,178				13,983				11,879				—				73,040
Rental related services			11,722				90				194				—				12,006
Rental operations			58,900				14,073				12,073				—				85,046
Sales			12,903				664				3,641				6,087				23,295
Other			1,423				301				649				—				2,373
Total gross profit			73,226				15,038				16,363				6,087				110,714
Selling and administrative expenses			36,777				7,547				7,320				1,899				53,543
Income from operations		$	36,449			$	7,491			$	9,043			$	4,188				57,171
Interest expense																			7,795
Foreign currency exchange gain																			(81	)
Provision for income taxes																			13,484
Net income																		$	35,973
Other Information
Adjusted EBITDA 1		$	53,088			$	9,834			$	19,314			$	4,290			$	86,525
Average rental equipment 2		$	1,300,787			$	233,742			$	330,532
Average monthly total yield 3			2.10	%			2.42	%			2.74	%
Average utilization 4			73.7	%			61.1	%			64.8	%
Average monthly rental rate 5			2.85	%			3.95	%			4.22	%

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 June 30, 2024
(dollar amounts in thousands)		Mobile Modular				Portable Storage				TRS-RenTelco				Enviroplex				Consolidated
Revenues
Rental		$	78,039			$	17,823			$	25,314			$	—			$	121,176
Rental related services			28,920				4,640				798				—				34,358
Rental operations			106,959				22,463				26,112				—				155,534
Sales			35,930				1,266				5,845				11,373				54,414
Other			1,657				293				713				—				2,663
Total revenues			144,546				24,022				32,670				11,373				212,611
Costs and Expenses
Direct costs of rental operations:
Depreciation			9,995				1,001				11,169				—				22,165
Rental related services			19,828				4,476				686				—				24,990
Other			21,265				1,527				5,128				—				27,920
Total direct costs of rental operations			51,088				7,004				16,983				—				75,075
Costs of sales			22,172				716				2,716				8,517				34,121
Total costs of revenues			73,260				7,720				19,699				8,517				109,196
Gross Profit
Rental			46,779				15,295				9,017				—				71,091
Rental related services			9,092				164				112				—				9,368
Rental operations			55,871				15,459				9,129				—				80,459
Sales			13,758				550				3,129				2,856				20,293
Other			1,657				293				713				—				2,663
Total gross profit			71,286				16,302				12,971				2,856				103,415
Selling and administrative expenses			33,239				7,465				6,585				1,714				49,003
Other income, net			—				—				—				—				—
Income from operations		$	38,047			$	8,837			$	6,386			$	1,142			$	54,412
Interest expense																			13,037
Foreign currency exchange loss																			31
WillScot Mobile Mini transaction costs 6																			12,367
Provision for income taxes																			8,359
Net income																		$	20,618
Other Information
Adjusted EBITDA 1		$	53,418			$	11,015			$	18,001			$	1,238			$	83,672
Average rental equipment 2		$	1,203,415			$	226,754			$	367,322
Average monthly total yield 3			2.16	%			2.62	%			2.28	%
Average utilization 4			78.4	%			66.1	%			56.5	%
Average monthly rental rate 5			2.76	%			3.96	%			4.07	%

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.
6.		During the year ended December 31, 2024, the Company determined that transaction costs incurred by the Company attributed to the terminated Merger Agreement were significant. Due to this determination, the Company reclassified $12.4 million in transaction costs from Selling and administrative expenses for the three months ended June 30, 2024, and reported such expenses separately as non-operating expense under the Corporate segment.

MCGRATH RENTCORP
BUSINESS SEGMENT DATA (unaudited)
Six months ended June 30, 2025
(dollar amounts in thousands)		Mobile Modular				Portable Storage				TRS-RenTelco				Enviroplex				Consolidated
Revenues
Rental		$	160,404			$	33,014			$	52,680			$	—			$	246,098
Rental related services			61,647				8,025				1,727				—				71,399
Rental operations			222,051				41,039				54,407				—				317,497
Sales			62,974				2,956				15,692				27,079				108,701
Other			2,881				617				1,336				—				4,834
Total revenues			287,906				44,612				71,435				27,079				431,032
Costs and Expenses
Direct costs of rental operations:
Depreciation			21,294				2,070				19,567				—				42,931
Rental related services			40,190				8,237				1,363				—				49,790
Other			44,802				3,445				10,924				—				59,171
Total direct costs of rental operations			106,286				13,752				31,854				—				151,892
Costs of sales			42,926				1,879				8,343				18,842				71,990
Total costs of revenues			149,212				15,631				40,197				18,842				223,882
Gross Profit
Rental			94,308				27,499				22,189				—				143,996
Rental related services			21,457				(212	)			364				—				21,609
Rental operations			115,765				27,287				22,553				—				165,605
Sales			20,048				1,077				7,349				8,237				36,711
Other			2,881				617				1,336				—				4,834
Total gross profit			138,694				28,981				31,238				8,237				207,150
Selling and administrative expenses			70,765				15,101				14,758				3,788				104,412
Other income, net			—				—				—				—				—
Income from operations		$	67,929			$	13,880			$	16,480			$	4,449				102,738
Interest expense																			15,954
Foreign currency exchange gain																			(86	)
Provision for income taxes																			22,689
Net income																		$	64,181
Other Information
Adjusted EBITDA 1		$	100,719			$	18,421			$	37,248			$	4,653			$	161,041
Average rental equipment 2		$	1,292,797			$	233,501			$	334,607
Average monthly total yield 3			2.07	%			2.36	%			2.62	%
Average utilization 4			74.2	%			60.6	%			63.0	%
Average monthly rental rate 5			2.79	%			3.89	%			4.17	%

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)
Six months ended June 30, 2024
(dollar amounts in thousands)		Mobile Modular				Portable Storage				TRS-RenTelco				Enviroplex				Consolidated
Revenues
Rental		$	154,535			$	36,230			$	50,743			$	—			$	241,508
Rental related services			53,053				9,363				1,522				—				63,938
Rental operations			207,588				45,593				52,265				—				305,446
Sales			61,256				2,478				12,657				13,092				89,483
Other			3,287				711				1,511				—				5,509
Total revenues			272,131				48,782				66,433				13,092				400,438
Costs and Expenses
Direct costs of rental operations:
Depreciation			19,870				1,965				22,696				—				44,531
Rental related services			35,608				8,932				1,236				—				45,776
Other			43,938				2,995				9,997				—				56,930
Total direct costs of rental operations			99,416				13,892				33,929				—				147,237
Costs of sales			39,584				1,484				5,658				9,791				56,518
Total costs of revenues			139,000				15,377				39,587				9,791				203,755
Gross Profit
Rental			90,727				31,270				18,050				—				140,047
Rental related services			17,445				431				286				—				18,162
Rental operations			108,172				31,701				18,336				—				158,209
Sales			21,672				993				6,999				3,301				32,965
Other			3,287				711				1,511				—				5,509
Total gross profit			133,131				33,405				26,846				3,301				196,683
Selling and administrative expenses			66,854				15,275				13,823				3,515				99,467
Other income, net			(6,220	)			(1,319	)			(1,742	)			—				(9,281	)
Income (loss) from operations		$	72,499			$	19,450			$	14,765			$	(216	)			106,497
Interest expense																			25,741
Foreign currency exchange loss																			163
WillScot Mobile Mini transaction costs 6																			21,721
Provision for income taxes																			15,406
Net income																		$	43,466
Other Information
Adjusted EBITDA 1		$	96,745			$	22,538			$	36,481			$	(24	)		$	155,740
Average rental equipment 2		$	1,188,828			$	225,025			$	369,756
Average monthly total yield 3			2.17	%			2.68	%			2.27	%
Average utilization 4			78.6	%			67.8	%			56.4	%
Average monthly rental rate 5			2.76	%			3.96	%			4.05	%

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 other income, net.
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.
6.		During the year ended December 31, 2024, the Company determined that transaction costs incurred by the Company attributed to the terminated Merger Agreement were significant. Due to this determination, the Company reclassified $21.7 million in transaction costs from Selling and administrative expenses for the six months ended June 30, 2024, and reported such expenses separately as non-operating expense under the Corporate segment.

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 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 and gains on property sales 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 Net Income to Adjusted EBITDA
(dollar amounts in thousands)	Three Months Ended June 30,								Six Months Ended June 30,								Twelve Months Ended June 30,
	2025				2024				2025				2024				2025				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
EBITDA		83,591				68,958				155,564				138,744				485,167				315,522
Share-based compensation		2,779				2,347				5,322				4,556				10,268				9,449
Transaction costs 3		155				12,367				155				21,721				41,593				23,306
Other income, net 4		—				—				—				(9,281	)			—				(12,899	)
Gain on merger termination from WillScot Mobile Mini 5		—				—				—				—				(180,000	)			—
Adjusted EBITDA 1	$	86,525			$	83,672			$	161,041			$	155,740			$	357,028			$	335,378
Adjusted EBITDA margin 2		37	%			39	%			37	%			38	%			38	%			38	%

Reconciliation of Net Cash Provided by Operating Activities to Adjusted EBITDA

(dollar amounts in thousands)	Three Months Ended June 30,								Six Months Ended June 30,								Twelve Months Ended June 30,
	2025				2024				2025				2024				2025				2024
Net cash provided by operating activities	$	55,812			$	79,209			$	109,694			$	138,629			$	345,440			$	158,903
Change in certain assets and liabilities:
Accounts receivable, net		24,919				5,429				14,459				(9,989	)			16,422				25,438
Inventories, prepaid expenses and other assets		11,427				(519	)			3,263				6,971				2,193				15,005
Accounts payable and accrued liabilities		(20,522	)			(3,800	)			10,266				6,160				(137,663	)			2,942
Deferred income		(8,050	)			(11,928	)			(15,124	)			(23,196	)			9,664				(28,000	)
Amortization of debt issuance costs		(22	)			(2	)			(45	)			(4	)			(107	)			(8	)
Foreign currency exchange (loss) gain		81				(31	)			86				(163	)			34				(61	)
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 1	$	86,525			$	83,672			$	161,041			$	155,740			$	357,026			$	335,378

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.		Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by total revenues for the period.
3.		Transaction costs include acquisition 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/20250724374579/en/

Keith E. Pratt

EVP & Chief Financial Officer

925-606-9200

Source: McGrath RentCorp