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 June 30, 2024 of $212.6 million, an increase
of 5% compared to the second quarter of 2023. The Company reported
net income from continuing operations of $20.6 million, or $0.84
per diluted share, for the second quarter of 2024, compared to net
income from continuing operations of $28.0 million, or $1.14 per
diluted share, for the second quarter of 2023.
SECOND QUARTER 2024 YEAR-OVER-YEAR COMPANY HIGHLIGHTS (FROM
CONTINUING OPERATIONS):
- Rental revenues increased 3% to $121.2 million.
- Total revenues increased 5% to $212.6 million.
- Selling and administrative expenses increased 31% to
$61.4 million primarily due to $12.4 million in transaction costs
attributable to the pending merger with WillScot Mobile Mini, which
decreased 2024 net income from continuing operations by $0.36 per
diluted share.
- Adjusted EBITDA1 increased 9% to $83.7 million.
- Dividend rate of $0.475 per share for the second quarter
2024. On an annualized basis, this dividend represents a 1.7% yield
on the July 24, 2024 close price of $111.63 per share.
Joe Hanna, President and CEO of McGrath, made the following
comments:
“We were pleased with our second quarter results. The 5%
increase in companywide revenues was driven by higher rental
operations and sales revenues.
Our modular business was the highlight for the quarter, with 10%
rental revenue growth. Rental revenues grew across our 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 demand conditions were weaker than a year ago,
resulting in 4% lower rental revenues for the quarter, compared to
a year ago. The weaker demand was primarily a result of lower
commercial construction project activity.
TRS-RenTelco experienced continued demand challenges, resulting
in 11% lower rental revenues for the quarter, compared to a year
ago. During the quarter we maintained disciplined new equipment
capital spending and made progress with reducing the fleet size to
better align with demand conditions.
I appreciate the strong commitment from the McGrath employee
team as we maintain our independent focus on disciplined execution
during the pending WillScot Mobile Mini transaction."
DIVISION HIGHLIGHTS:
All comparisons presented below are for the quarter ended June
30, 2024 to the quarter ended June 30, 2023 unless otherwise
indicated.
MOBILE MODULAR
For the second quarter of 2024, the Company’s Mobile Modular
division reported Adjusted EBITDA of $53.4 million, an increase of
$8.9 million, or 20%, when compared to the same quarter in
2023.
- Rental revenues increased 10% to $78.0 million, depreciation
expense increased 6% to $10.0 million, and other direct costs
decreased 9% to $21.3 million, which resulted in an increase in
gross profit on rental revenues of 23% to $46.8 million.
- Rental related services revenues increased 4% to $28.9 million,
primarily attributable to higher delivery and pick-up activities
and higher site related services, with associated gross profit
decreasing 3% to $9.1 million.
- Sales revenues decreased 6% to $35.9 million, primarily from
lower new equipment sales. Gross margin on sales was 38% in 2024,
compared to 31% in 2023, resulting in a 17% increase in gross
profit on sales revenues to $13.8 million. The increase in gross
margin on sales was primarily attributed to a higher mix of used
versus new sales during the quarter.
- Selling and administrative expenses increased $11.2 million to
$42.3 million. Included within selling and administrative expenses
was $11.3 million higher allocated corporate costs, which included
$9.0 million in allocated transaction costs attributed to the
pending merger with WillScot Mobile Mini.
PORTABLE STORAGE
For the second quarter of 2024, the Company’s Portable Storage
division reported Adjusted EBITDA of $11.0 million, a decrease of
$1.3 million, or 11%, when compared to the same quarter in
2023.
- Rental revenues decreased 4% to $17.8 million, depreciation
expense increased 15% to $1.0 million, and other direct costs
decreased 10% to $1.5 million, which resulted in a decrease in
gross profit on rental revenues of 4% to $15.3 million.
- Rental related services revenues were $4.6 million and gross
profit on rental related services revenues was $0.2 million, which
was down from $0.7 million in the second quarter of 2023.
- Sales revenues increased $0.2 million to $1.3 million,
primarily from higher used equipment sales. Gross margin on sales
was 43% compared to 38% in 2023, resulting in a $0.1 million
increase in gross profit on sales revenues to $0.6 million.
- Selling and administrative expenses increased $1.7 million to
$8.9 million, primarily due to higher allocated corporate expenses,
which included $1.4 million in allocated transaction costs
attributed to the pending WillScot Mobile Mini merger.
TRS-RENTELCO
For the second quarter of 2024, the Company’s TRS-RenTelco
division reported Adjusted EBITDA of $18.0 million, a decrease of
16%, when compared to the same quarter in 2023.
- Rental revenues decreased 11% to $25.3 million, depreciation
expense decreased 9%, and other direct costs decreased 6%,
resulting in a 16% decrease in gross profit on rental revenues to
$9.0 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 decreased 22% to $5.8 million and gross profit
on sales revenues decreased 23% to $3.1 million.
- Selling and administrative expenses increased 19%, to $8.5
million, primarily due to higher allocated corporate expenses,
which included $1.9 million in transaction costs attributed to the
pending merger with WillScot Mobile Mini.
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 July 1, 2024,
McGrath RentCorp will host a conference call at 5:00 p.m. Eastern
Time (2:00 p.m. Pacific Time) on July 25, 2024 to discuss the
second quarter 2024 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 1-800-723-0488 (in the U.S.), or
1-402-220-2651 (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
(UNAUDITED)
Three Months Ended June
30,
Six Months Ended June
30,
(in thousands,
except per share amounts)
2024
2023
2024
2023
Revenues
Rental
$
121,176
$
117,840
$
241,508
$
228,087
Rental related services
34,358
33,857
63,938
60,989
Rental operations
155,534
151,697
305,446
289,076
Sales
54,414
47,801
89,483
71,461
Other
2,663
3,532
5,509
6,211
Total revenues
212,611
203,030
400,438
366,748
Costs and
Expenses
Direct costs of rental operations:
Depreciation of rental equipment
22,165
22,597
44,531
44,430
Rental related services
24,990
23,825
45,776
43,093
Other
27,920
30,560
56,930
61,695
Total direct costs of rental
operations
75,075
76,982
147,237
149,218
Costs of sales
34,121
31,438
56,518
45,553
Total costs of revenues
109,196
108,420
203,755
194,771
Gross profit
103,415
94,610
196,683
171,977
Expenses:
Selling and administrative expenses
61,370
47,026
121,188
104,524
Other income, net
—
—
(9,281
)
—
Income from operations
42,045
47,584
84,776
67,453
Interest expense
13,037
9,945
25,741
17,409
Foreign currency exchange loss (gain)
31
18
163
(208
)
Income from continuing operations before
provision for income taxes
28,977
37,621
58,872
50,252
Provision for income taxes from continuing
operations
8,359
9,669
15,406
10,782
Income from continuing operations
20,618
27,952
43,466
39,470
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
—
2,630
—
61,513
Income from discontinued operations
—
2,630
—
62,769
Net income
$
20,618
$
30,582
$
43,466
$
102,239
Earnings per share from continuing
operations:
Basic
$
0.84
$
1.14
$
1.77
$
1.61
Diluted
$
0.84
$
1.14
$
1.77
$
1.61
Earnings per share from discontinued
operations:
Basic
$
—
$
0.11
$
—
$
2.57
Diluted
$
—
$
0.11
$
—
$
2.56
Earnings per share:
Basic
$
0.84
$
1.25
$
1.77
$
4.18
Diluted
$
0.84
$
1.25
$
1.77
$
4.17
Shares used in per share calculation:
Basic
24,549
24,479
24,531
24,448
Diluted
24,560
24,512
24,562
24,527
Cash dividends declared per share
$
0.475
$
0.465
$
0.950
$
0.930
MCGRATH RENTCORP
CONDENSED CONSOLIDATED BALANCE
SHEETS
(UNAUDITED)
June 30,
December 31,
(in
thousands)
2024
2023
Assets
Cash
$
9,396
$
877
Accounts receivable, net of allowance for
credit losses of $2,866 at June 30, 2024 and $2,801 at December 31,
2023
217,379
227,368
Rental equipment, at cost:
Relocatable modular buildings
1,398,475
1,291,093
Portable storage containers
242,107
236,123
Electronic test equipment
368,324
377,587
2,008,906
1,904,803
Less: accumulated depreciation
(601,584
)
(575,480
)
Rental equipment, net
1,407,322
1,329,323
Property, plant and equipment, net
191,801
169,114
Inventories
28,213
15,425
Prepaid expenses and other assets
81,547
87,364
Intangible assets, net
59,453
64,588
Goodwill
323,224
323,224
Total assets
$
2,318,335
$
2,217,283
Liabilities and
Shareholders' Equity
Liabilities:
Notes payable
$
794,271
$
762,975
Accounts payable
73,132
58,760
Accrued liabilities
108,928
108,763
Deferred income
134,624
111,428
Deferred income taxes, net
253,147
241,555
Total liabilities
1,364,102
1,283,481
Shareholders’ equity:
Common stock, no par value - Authorized
40,000 shares
Issued and outstanding - 24,550 shares as
of June 30, 2024 and 24,496 shares as of December 31, 2023
111,596
111,122
Retained earnings
842,675
822,796
Accumulated other comprehensive loss
(38
)
(116
)
Total shareholders’ equity
954,233
933,802
Total liabilities and shareholders’
equity
$
2,318,335
$
2,217,283
MCGRATH RENTCORP
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended June
30,
(in
thousands)
2024
2023
Cash Flows from
Operating Activities:
Net income
$
43,466
$
102,239
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
54,131
54,958
Deferred income taxes
11,592
(39,486
)
Provision for credit losses
873
1,400
Share-based compensation
4,556
3,382
Gain on sale of property, plant and
equipment
(9,281
)
—
Gain on sale of discontinued
operations
—
(61,513
)
Gain on sale of used rental equipment
(15,537
)
(14,250
)
Foreign currency exchange loss (gain)
163
(208
)
Amortization of debt issuance costs
4
4
Change in:
Accounts receivable
9,116
(1,116
)
Inventories
(12,788
)
(6,594
)
Prepaid expenses and other assets
5,817
(1,910
)
Accounts payable
23,155
19,209
Accrued liabilities
166
6,046
Deferred income
23,196
9,290
Net cash provided by operating
activities
138,629
71,451
Cash Flows from
Investing Activities:
Proceeds from sale of discontinued
operations
—
268,012
Purchases of rental equipment
(145,345
)
(128,088
)
Purchases of property, plant and
equipment
(30,125
)
(11,229
)
Cash paid for acquisition of
businesses
—
(456,312
)
Proceeds from sales of used rental
equipment
29,334
27,410
Proceeds from sales of property, plant and
equipment
12,251
—
Net cash used in investing activities
(133,885
)
(300,207
)
Cash Flows from
Financing Activities:
Net (payments) borrowings under bank lines
of credit
(43,708
)
258,885
Borrowings under term note agreement
75,000
—
Taxes paid related to net share settlement
of stock awards
(4,082
)
(6,100
)
Payment of dividends
(23,435
)
(22,782
)
Net cash provided by financing
activities
3,775
230,003
Effect of foreign currency exchange rate
changes on cash
—
1
Net increase in cash
8,519
1,248
Cash balance, beginning of period
877
957
Cash balance, end of period
$
9,396
$
2,205
Supplemental
Disclosure of Cash Flow Information:
Interest paid, during the period
$
26,394
$
16,802
Net income taxes (refunded) paid, during
the period
$
(4,599
)
$
6,931
Dividends accrued during the period, not
yet paid
$
12,150
$
11,937
Rental equipment acquisitions, not yet
paid
$
7,634
$
7,612
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
42,267
8,874
8,515
1,714
61,370
Income from operations
$
29,019
$
7,428
$
4,456
$
1,142
42,045
Interest expense
(13,037
)
Foreign currency exchange loss
(31
)
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
%
- 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.
- Average rental equipment represents the cost of rental
equipment, excluding new equipment inventory and accessory
equipment.
- Average monthly total yield is calculated by dividing the
averages of monthly rental revenues by the cost of rental equipment
for the period.
- 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.
- 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,
2023
(dollar amounts in thousands)
Mobile Modular
Portable Storage
TRS-RenTelco
Enviroplex
Consolidated
Revenues
Rental
$
70,770
$
18,487
$
28,583
$
—
$
117,840
Rental related services
27,836
5,354
667
—
33,857
Rental operations
98,606
23,841
29,250
—
151,697
Sales
38,248
1,109
7,521
923
47,801
Other
1,983
475
1,074
—
3,532
Total revenues
138,838
25,424
37,845
923
203,030
Costs and
Expenses
Direct costs of rental operations:
Depreciation
9,415
870
12,312
—
22,597
Rental related services
18,443
4,641
741
—
23,825
Other
23,377
1,705
5,478
—
30,560
Total direct costs of rental
operations
51,236
7,215
18,531
—
76,982
Costs of sales
26,517
690
3,431
800
31,438
Total costs of revenues
77,753
7,905
21,962
800
108,420
Gross
Profit
Rental
37,977
15,913
10,793
—
64,683
Rental related services
9,393
713
(74
)
—
10,032
Rental operations
47,370
16,626
10,719
—
74,715
Sales
11,731
419
4,090
123
16,363
Other
1,983
475
1,074
—
3,532
Total gross profit
61,084
17,520
15,883
123
94,610
Selling and administrative expenses
31,092
7,204
7,126
1,604
47,026
Income (loss) from operations
$
29,993
$
10,315
$
8,757
$
(1,481
)
47,584
Interest expense
(9,945
)
Foreign currency exchange loss
(18
)
Provision for income taxes
(9,669
)
Net income
$
27,952
Other
Information
Adjusted EBITDA 1
$
44,516
$
12,308
$
21,538
$
(1,394
)
$
76,968
Average rental equipment 2
$
1,117,141
$
204,627
$
393,891
Average monthly total yield 3
2.11
%
3.01
%
2.40
%
Average utilization 4
79.3
%
78.2
%
58.2
%
Average monthly rental rate 5
2.66
%
3.85
%
4.16
%
- 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.
- Average rental equipment represents the cost of rental
equipment, excluding new equipment inventory and accessory
equipment.
- Average monthly total yield is calculated by dividing the
averages of monthly rental revenues by the cost of rental equipment
for the period.
- 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.
- 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
56,517
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
82,354
17,885
17,433
3,517
121,189
Other income, net
(6,220
)
(1,319
)
(1,742
)
—
(9,281
)
Income (loss) from operations
$
56,999
$
16,840
$
11,155
$
(216
)
84,778
Interest expense
(25,741
)
Foreign currency exchange loss
(163
)
Provision for income taxes
(15,406
)
Net income
$
43,468
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
%
- 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.
- Average rental equipment represents the cost of rental
equipment, excluding new equipment inventory and accessory
equipment.
- Average monthly total yield is calculated by dividing the
averages of monthly rental revenues by the cost of rental equipment
for the period.
- 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.
- 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, 2023
(dollar amounts in thousands)
Mobile Modular
Portable Storage
TRS-RenTelco
Enviroplex
Adler Tanks
(Discontinued)
Consolidated
Revenues
Rental
$
134,826
$
35,544
$
57,717
$
—
$
6,520
$
234,607
Rental related services
49,370
10,072
1,547
—
2,584
63,573
Rental operations
184,196
45,616
59,264
—
9,104
298,180
Sales
55,215
1,747
12,635
1,864
269
71,730
Other
3,342
803
2,066
—
65
6,276
Total revenues
242,753
48,166
73,965
1,864
9,438
376,186
Costs and
Expenses
Direct costs of rental operations:
Depreciation
18,072
1,657
24,701
—
1,325
45,755
Rental related services
32,669
9,022
1,402
—
2,020
45,113
Other
47,504
3,487
10,703
—
1,270
62,965
Total direct costs of rental
operations
98,246
14,166
36,806
—
4,614
153,832
Costs of sales
37,263
1,018
5,656
1,616
159
45,712
Total costs of revenues
135,509
15,184
42,462
1,616
4,773
199,544
Gross
Profit
Rental
69,249
30,400
22,313
—
3,926
125,888
Rental related services
16,701
1,050
145
—
564
18,460
Rental operations
85,950
31,450
22,458
—
4,490
144,348
Sales
17,952
729
6,979
248
110
26,018
Other
3,342
803
2,066
—
65
6,276
Total gross profit
107,244
32,982
31,503
248
4,665
176,642
Selling and administrative expenses
69,548
15,262
16,577
3,137
2,582
107,106
Income (loss) from operations
$
37,696
$
17,720
$
14,926
$
(2,889
)
$
2,083
69,536
Interest expense
(17,783
)
Foreign currency exchange gain
208
Provision for income taxes
(11,235
)
Net income
$
40,726
Other
Information
Adjusted EBITDA 1
$
76,941
$
22,328
$
42,173
$
(2,724
)
$
3,682
$
142,400
Average rental equipment 2
$
1,044,711
$
196,577
$
395,049
Average monthly total yield 3
2.15
%
3.01
%
2.42
%
Average utilization 4
79.4
%
79.4
%
58.7
%
Average monthly rental rate 5
2.71
%
3.80
%
4.15
%
- 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.
- Average rental equipment represents the cost of rental
equipment, excluding new equipment inventory and accessory
equipment.
- Average monthly total yield is calculated by dividing the
averages of monthly rental revenues by the cost of rental equipment
for the period.
- 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.
- 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 and gains on property sales. 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 and gains on property sales. 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 June
30,
Six Months Ended June
30,
Twelve Months Ended June
30,
2024
2023
2024
2023
2024
2023
Income from continuing operations
$
20,618
$
27,952
$
43,466
$
39,470
$
115,848
$
101,577
Provision for income taxes from continuing
operations
8,359
9,669
15,406
10,782
42,234
29,654
Interest expense
13,037
9,945
25,741
17,409
48,892
24,937
Depreciation and amortization
26,944
27,368
54,131
53,501
108,548
100,650
EBITDA
68,958
74,934
138,744
121,162
315,522
256,818
Share-based compensation
2,347
1,889
4,556
3,264
9,449
7,228
Transaction costs 3
12,367
145
21,721
14,292
23,306
18,345
Other income, net 4
—
—
(9,281
)
—
(12,899
)
—
Adjusted EBITDA 1
$
83,672
$
76,968
$
155,740
$
138,718
$
335,378
$
282,391
Adjusted EBITDA margin 2
39
%
38
%
38
%
38
%
38
%
39
%
Reconciliation of Adjusted EBITDA to Net Cash Provided by
Operating Activities
(dollar amounts in thousands)
Three Months Ended June
30,
Six Months Ended June
30,
Twelve Months Ended June
30,
2024
2023
2024
2023
2024
2023
Adjusted EBITDA 1
$
83,672
$
76,968
$
155,740
$
142,400
$
335,378
$
308,256
Interest paid
(12,210
)
(8,985
)
(26,394
)
(16,802
)
(48,195
)
(25,756
)
Income taxes paid, net of refunds
received
5,078
(6,518
)
4,599
(6,931
)
(80,035
)
(17,215
)
Gain on sale of used rental equipment
(8,182
)
(11,161
)
(15,537
)
(14,250
)
(32,929
)
(36,136
)
Foreign currency exchange loss
31
18
163
(208
)
61
2
Amortization of debt issuance costs
2
2
4
4
8
11
Change in certain assets and
liabilities:
Accounts receivable, net
(5,429
)
(16,669
)
9,989
284
(25,438
)
(22,410
)
Prepaid expenses and other assets
519
(1,159
)
5,817
(8,504
)
(15,005
)
(14,133
)
Accounts payable and other liabilities
3,800
(2,828
)
(18,948
)
(33,832
)
(2,942
)
(22,935
)
Deferred income
11,928
6,072
23,196
9,290
28,000
14,156
Net cash provided by operating
activities
$
79,209
$
35,740
$
138,629
$
71,451
$
158,903
$
183,840
- 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. Adjusted EBITDA for the six months
ended June 30, 2023, excludes the gain on sale of discontinued
operations from the divestiture of Adler Tanks. Total Adjusted
EBITDA attributed to discontinued operations for the six month
period ended June 30, 2023 was $3,682.
- Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided
by total revenues for the period.
- Transaction costs include acquisition and divestiture related
legal and professional fees and other costs specific to these
transactions.
- Other income, net consists of net gains on property, plant and
equipment sales that are infrequent in nature and excluded from
Adjusted EBITDA.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240724863913/en/
Keith E. Pratt EVP & Chief Financial Officer
925-606-9200
McGrath RentCorp (NASDAQ:MGRC)
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McGrath RentCorp (NASDAQ:MGRC)
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