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McGrath RentCorp Announces Results for Second Quarter 2021

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LIVERMORE, Calif., August 03, 2021--(BUSINESS WIRE)--McGrath RentCorp (NASDAQ: MGRC) (the "Company"), a diversified business-to-business rental company, today announced total revenues for the quarter ended June 30, 2021 of $146.4 million, an increase of 6%, compared to the second quarter of 2020. The Company reported net income of $20.6 million, or $0.84 per diluted share, for the second quarter of 2021, compared to net income of $22.5 million, or $0.92 per diluted share, for the second quarter of 2020.

SECOND QUARTER 2021 COMPANY HIGHLIGHTS:

  • Rental revenues increased 10% year-over-year to $94.6 million.

  • Total revenues increased 6% year-over-year to $146.4 million.

  • Excluding $2.6 million Design Space and Kitchens To Go transaction related costs and amortization of newly acquired intangible assets, net income for the second quarter was $22.5 million, or $0.92 per share, which was comparable to second quarter of 2020.

  • Adjusted EBITDA1 increased $0.4 million to $58.5 million.

  • Dividend rate increased 4% year-over-year to $0.435 per share for the second quarter of 2021. On an annualized basis, this dividend represents a 2.2% yield on the August 2, 2021 close price of $78.90 per share.

  • The Company raised full year 2021 guidance for total revenue to $610 million to $640 million and for adjusted EBITDA to $245 million to $260 million.

Joe Hanna, President and CEO of McGrath RentCorp, made the following comments regarding these results and future expectations:

"Our second quarter results reflect improved end market conditions in each of our three business segments. Companywide rental revenues increased 10% year over year. Modular rental revenues grew 14%, with just over half the growth attributable to our Design Space and Kitchens To Go acquisitions during the quarter. Rental revenues at TRS and Adler grew 7% and 4% respectively. Sequential rental revenue growth in each segment reflected improving business conditions as we enter seasonally busier months of the year.

Our teams have been busy working through the integration of Design Space and Kitchens To Go, acquired during the second quarter. I am grateful for their exceptional support and very pleased with their progress. I am excited about the long-term potential from both of these acquisitions. Just in the first few months we have begun to realize opportunities from our combined selling resources and we expect many more opportunities to come.

While business activity levels have increased, we have also seen some impact from current economic realities in the new equipment sales portion of our modular business. Supply chain delays, labor shortages and higher costs for materials and labor are starting to extend project timelines and cause some new sales to push out to later in the year, or into next year. Consequently, our outlook for new modular equipment sales in 2021, while still higher than 2020, is not as strong as it was a few months ago.

The second half of the year is typically the most substantial contributor to our annual results. While the potential for COVID-19 related disruption remains, we will be fully focused on solid execution to make the most of the improved business conditions that we have recently seen."

DIVISION HIGHLIGHTS:

All comparisons presented below are for the quarter ended June 30, 2021 to the quarter ended June 30, 2020 unless otherwise indicated.

MOBILE MODULAR

For the second quarter of 2021, the Company’s Mobile Modular division reported income from operations of $18.2 million, a decrease of $2.4 million, or 12%. Rental revenues increased 14% to $53.2 million, depreciation expense increased 23% to $7.1 million and other direct costs increased 28% to $15.9 million, which resulted in an increase in gross profit on rental revenues of 6% to $30.3 million. The rental revenue increase was due in part to approximately $4.0 million revenues earned during the quarter from new Design Space and Kitchens To Go customers acquired during the quarter. Rental related services revenues increased 12% to $16.2 million, primarily due to increased delivery and return delivery revenues at Portable Storage and higher amortization of modular building delivery and return delivery and dismantle revenues, with associated gross profit increasing 7% to $4.4 million. Sales revenues decreased 3% to $14.8 million, primarily due to lower new equipment sales. Gross margin on sales was 39% compared to 29% in 2020, resulting in a 29% increase in gross profit on sales revenues to $5.8 million. Selling and administrative expenses increased 34% to $22.6 million, primarily due to increased employee salaries and benefit costs totaling $2.0 million, mostly due to the addition of Design Space and Kitchens To Go employees during the quarter, $1.7 million higher amortization of intangible assets due to the Design Space and Kitchens To Go acquisitions and $0.9 million acquisition related transaction costs in 2021.

TRS-RENTELCO

For the second quarter of 2021, the Company’s TRS-RenTelco division reported income from operations of $8.5 million, an increase of $0.2 million, or 3%. Rental revenues increased 7% to $27.9 million, depreciation expense increased 1% to $11.9 million and other direct costs increased 32% to $4.7 million, which resulted in a 5% increase in gross profit on rental revenues to $11.2 million. The rental revenue increase was primarily due to increased demand for general purpose equipment compared to the prior year. Sales revenues decreased 20% to $4.8 million. Gross margin on sales was 62% in 2021 compared to 49% in 2020, resulting in a 3% increase in gross profit on sales revenues to $3.0 million. Selling and administrative expenses increased 3% to $6.1 million.

ADLER TANKS

For the second quarter of 2021, the Company’s Adler Tanks division reported income from operations of $1.7 million, which was comparable to the prior year. Rental revenues increased 4% to $13.5 million, depreciation expense increased 2% to $4.2 million and other direct costs increased 19% to $2.7 million, which resulted in a comparable gross profit on rental revenues to $6.7 million in 2021 and 2020. Rental related services revenues increased 8% to $5.8 million, with gross profit on rental related services decreasing $0.3 million, or 21%, to $1.0 million. Selling and administrative expenses decreased 2% to $6.3 million.

FINANCIAL OUTLOOK:

Based upon the Company’s year-to-date results, current outlook for the remainder of the year, and the previously announced acquisition of Design Space, the Company is raising its financial outlook.

For the full-year 2021, the Company expects:

Previous

Current

Total revenue:

$570 million to $610 million

$610 million to $640 million

Adjusted EBITDA:

$232 million to $247 million

$245 million to $260 million

Gross rental equipment capital expenditures:

$90 million to $110 million

$100 million to $120 million

1.

Adjusted EBITDA is defined as net income before interest expense, provision for income taxes, depreciation, amortization, non-cash impairment costs and share-based compensation. 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 RENTCORP:

Founded in 1979, McGrath RentCorp (Nasdaq: MGRC) is a diversified business-to-business rental company providing modular buildings, electronic test equipment, portable storage and tank containment solutions across the United States and other select North American regions. The Company’s rental operations consist of four divisions: Mobile Modular rents and sells modular buildings to fulfill customers’ temporary and permanent classroom and office space needs; TRS-RenTelco rents and sells electronic test equipment; Adler Tank Rentals rents and sells containment solutions for hazardous and nonhazardous liquids and solids; and Mobile Modular Portable Storage provides portable storage rental solutions. For more information on McGrath RentCorp and its operating units, please visit our websites:

Corporate – www.mgrc.com
Modular Buildings – www.mobilemodular.com
Electronic Test Equipment – www.trsrentelco.com
Tanks and Boxes – www.adlertankrentals.com
Portable Storage – www.mobilemodularcontainers.com
School Facilities Manufacturing – www.enviroplex.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 7, 2021, McGrath RentCorp will host a conference call at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) on August 3, 2021 to discuss the second quarter 2021 results. To participate in the teleconference, dial 1-844-707-0666 (in the U.S.), or 1-703-639-1220 (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 1-855-859-2056 (in the U.S.), or 1-404-537-3406 (outside the U.S.). The pass code for the conference call replay is 5573645. 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, Mr. Hanna’s statements about being excited about the long-term potential from both of the Design Space and Kitchens To Go acquisitions, the expectation of the realization of more opportunities from the combined selling resources, the impact supply chain delays, labor shortages and higher costs of materials and labor are having on project timelines and the Company’s outlook for new equipment sales in 2021, the potential for COVID-19 related disruption and keeping fully focused on solid execution and improved business conditions, as well as the statements regarding the full year 2021 in the "Financial Outlook" section, are 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 duration of the COVID-19 pandemic and its economic impact, the extent and length of the shelter-in and other restrictions associated with COVID-19 pandemic, the health of the education and commercial markets in our modular building division; the activity levels in the general purpose and communications test equipment markets at TRS-RenTelco; the ability to obtain the synergies expected from the Design Space and Kitchens To Go acquisition, the utilization levels and rental rates of our Adler Tanks liquid and solid containment tank and box rental assets; continued execution of our performance improvement initiatives; and our ability to effectively manage our rental assets, as well as the factors disclosed under "Risk Factors" in the Company’s Form 10-K and other SEC filings.

Forward-looking statements are made only as of the date hereof. 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)

2021

2020

2021

2020

Revenues

Rental

$

94,581

$

85,629

$

180,668

$

175,135

Rental related services

22,688

20,475

42,357

44,986

Rental operations

117,269

106,104

223,025

220,121

Sales

28,256

30,669

42,867

45,035

Other

910

900

1,738

1,970

Total revenues

146,435

137,673

267,630

267,126

Costs and Expenses

Direct costs of rental operations:

Depreciation of rental equipment

23,159

21,583

44,414

43,221

Rental related services

17,276

14,894

31,880

33,157

Other

23,278

18,165

42,985

37,618

Total direct costs of rental operations

63,713

54,642

119,279

113,996

Costs of sales

16,855

19,799

25,403

28,242

Total costs of revenues

80,568

74,441

144,682

142,238

Gross profit

65,867

63,232

122,948

124,888

Selling and administrative expenses

36,261

30,540

69,398

62,494

Income from operations

29,606

32,692

53,550

62,394

Other expense:

Interest expense

(2,257

)

(2,184

)

(4,040

)

(4,836

)

Foreign currency exchange (loss) gain

(2

)

117

(57

)

(319

)

Income before provision for income taxes

27,347

30,625

49,453

57,239

Provision for income taxes

6,739

8,076

11,447

14,531

Net income

$

20,608

$

22,549

$

38,006

$

42,708

Earnings per share:

Basic

$

0.85

$

0.93

$

1.57

$

1.76

Diluted

$

0.84

$

0.92

$

1.55

$

1.74

Shares used in per share calculation:

Basic

24,229

24,121

24,191

24,207

Diluted

24,494

24,471

24,505

24,612

Cash dividends declared per share

$

0.435

$

0.420

$

0.870

$

0.840

MCGRATH RENTCORP

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

June 30,

December 31,

(in thousands)

2021

2020

Assets

Cash

$

2,412

$

1,238

Accounts receivable, net of allowance for doubtful accounts of $2,225 in 2021 and $2,100 in 2020

140,909

123,316

Rental equipment, at cost:

Relocatable modular buildings

1,019,697

882,115

Electronic test equipment

360,720

333,020

Liquid and solid containment tanks and boxes

313,677

315,706

1,694,094

1,530,841

Less accumulated depreciation

(621,039

)

(592,725

)

Rental equipment, net

1,073,055

938,116

Property, plant and equipment, net

138,590

136,210

Prepaid expenses and other assets

57,499

41,549

Intangible assets, net

51,169

7,118

Goodwill

132,393

28,197

Total assets

$

1,596,027

$

1,275,744

Liabilities and Shareholders' Equity

Liabilities:

Notes payable

$

472,696

$

222,754

Accounts payable and accrued liabilities

144,901

108,334

Deferred income

56,964

45,975

Deferred income taxes, net

223,345

216,077

Total liabilities

897,906

593,140

Shareholders’ equity:

Common stock, no par value - Authorized 40,000 shares

Issued and outstanding - 24,245 shares as of June 30, 2021 and 24,128 shares as of December 31, 2020

105,058

106,289

Retained earnings

593,132

576,419

Accumulated other comprehensive loss

(69

)

(104

)

Total shareholders’ equity

698,121

682,604

Total liabilities and shareholders’ equity

$

1,596,027

$

1,275,744

MCGRATH RENTCORP

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

Six Months Ended June 30,

(in thousands)

2021

2020

Cash Flows from Operating Activities:

Net income

$

38,006

$

42,708

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

50,559

47,663

Provision for doubtful accounts

138

833

Share-based compensation

3,597

3,224

Gain on sale of used rental equipment

(11,870

)

(9,602

)

Foreign currency exchange loss

57

319

Amortization of debt issuance costs

6

5

Change in:

Accounts receivable

(5,494

)

1,326

Prepaid expenses and other assets

(9,385

)

(1,641

)

Accounts payable and accrued liabilities

17,642

6,389

Deferred income

7,458

5,815

Deferred income taxes

7,268

483

Net cash provided by operating activities

97,982

97,522

Cash Flows from Investing Activities:

Purchases of rental equipment

(58,902

)

(57,564

)

Purchases of property, plant and equipment

(2,272

)

(6,893

)

Cash paid for acquisition of businesses

(284,341

)

Proceeds from sales of used rental equipment

24,674

21,921

Net cash used in investing activities

(320,841

)

(42,536

)

Cash Flows from Financing Activities:

Net borrowing (repayment) under bank lines of credit

189,983

(21,288

)

Borrowing under private placement

60,000

Repurchase of common stock

(13,501

)

Taxes paid related to net share settlement of stock awards

(4,828

)

(2,340

)

Payment of dividends

(21,089

)

(19,526

)

Net cash provided by (used in) financing activities

224,066

(56,655

)

Effect of foreign currency exchange rate changes on cash

(33

)

21

Net increase (decrease) in cash

1,174

(1,648

)

Cash balance, beginning of period

1,238

2,342

Cash balance, end of period

$

2,412

$

694

Supplemental Disclosure of Cash Flow Information:

...

Interest paid, during the period

$

3,987

$

5,031

Net income taxes paid, during the period

$

6,990

$

2,153

Dividends accrued during the period, not yet paid

$

9,918

$

10,255

Rental equipment acquisitions, not yet paid

$

8,502

...

$

6,654

MCGRATH RENTCORP

BUSINESS SEGMENT DATA (unaudited)

Three months ended June 30, 2021

(dollar amounts in thousands)

Mobile
Modular

TRS-
RenTelco

Adler Tanks

Enviroplex

Consolidated

Revenues

Rental

$

53,238

$

27,860

$

13,483

$

$

94,581

Rental related services

16,207

710

5,771

22,688

Rental operations

69,445

28,570

19,254

117,269

Sales

14,784

4,757

593

8,122

28,256

Other

343

456

111

910

Total revenues

84,572

33,783

19,958

8,122

146,435

Costs and Expenses

Direct costs of rental operations:

Depreciation

7,074

11,916

4,169

23,159

Rental related services

11,804

745

4,727

17,276

Other

15,901

4,718

2,659

23,278

Total direct costs of rental operations

34,779

17,379

11,555

63,713

Costs of sales

9,034

1,792

427

5,602

16,855

Total costs of revenues

43,813

19,171

11,982

5,602

80,568

Gross Profit

Rental

30,264

11,225

6,655

48,144

Rental related services

4,401

(33

)

1,044

5,412

Rental operations

34,665

11,192

7,699

53,556

Sales

5,751

2,964

166

2,520

11,401

Other

343

456

111

910

Total gross profit

40,759

14,612

7,976

2,520

65,867

Selling and administrative expenses

22,602

6,073

6,253

1,333

36,261

Income from operations

$

18,157

$

8,539

$

1,723

$

1,187

29,606

Interest expense

(2,257

)

Foreign currency exchange gain

(2

)

Provision for income taxes

(6,739

)

Net income

$

20,608

Other Information

Average rental equipment 1

$

906,653

$

349,480

$

313,108

Average monthly total yield 2

1.96

%

2.66

%

1.44

%

Average utilization 3

75.5

%

67.7

%

44.0

%

Average monthly rental rate 4

2.59

%

3.93

%

3.27

%

1.

Average rental equipment represents the cost of rental equipment, excluding accessory equipment. For Mobile Modular and Adler Tanks, Average rental equipment also excludes new equipment inventory.

2.

Average monthly total yield is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment for the period.

3.

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.

4.

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, 2020

(dollar amounts in thousands)

Mobile
Modular

TRS-
RenTelco

Adler Tanks

Enviroplex

Consolidated

Revenues

Rental

$

46,628

$

26,012

$

12,989

$

$

85,629

Rental related services

14,463

670

5,342

20,475

Rental operations

61,091

26,682

18,331

106,104

Sales

15,316

5,922

232

9,199

30,669

Other

355

475

70

900

Total revenues

76,762

33,079

18,633

9,199

137,673

Costs and Expenses

Direct costs of rental operations:

Depreciation

5,737

11,750

4,096

21,583

Rental related services

10,362

517

4,015

14,894

Other

12,376

3,562

2,227

18,165

Total direct costs of rental operations

28,475

15,829

10,338

54,642

Costs of sales

10,845

3,049

228

5,677

19,799

Total costs of revenues

39,320

18,878

10,566

5,677

74,441

Gross Profit

Rental

28,514

10,700

6,666

45,880

Rental related services

4,101

153

1,327

5,581

Rental operations

32,615

10,853

7,993

51,461

Sales

4,471

2,873

4

3,522

10,870

Other

356

475

70

901

Total gross profit

37,442

14,201

8,067

3,522

63,232

Selling and administrative expenses

16,857

5,875

6,353

1,455

30,540

Income from operations

$

20,585

$

8,326

$

1,714

$

2,067

32,692

Interest expense

(2,184

)

Foreign currency exchange gain

117

Provision for income taxes

(8,076

)

Net income

$

22,549

Other Information

Average rental equipment 1

$

822,743

$

338,919

$

314,780

Average monthly total yield 2

1.89

%

2.56

%

1.38

%

Average utilization 3

77.7

%

63.9

%

44.3

%

Average monthly rental rate 4

2.43

%

4.00

%

3.10

%

1.

Average rental equipment represents the cost of rental equipment, excluding accessory equipment. For Mobile Modular and Adler Tanks, Average rental equipment also excludes new equipment inventory.

2.

Average monthly total yield is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment for the period.

3.

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.

4.

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, 2021

(dollar amounts in thousands)

Mobile
Modular

TRS-
RenTelco

Adler Tanks

Enviroplex

Consolidated

Revenues

Rental

$

99,895

$

55,136

$

25,637

$

$

180,668

Rental related services

30,258

1,450

10,649

42,357

Rental operations

130,153

56,586

36,286

223,025

Sales

22,404

9,906

1,201

9,356

42,867

Other

663

894

181

1,738

Total revenues

153,220

67,386

37,668

9,356

267,630

Costs and Expenses

Direct costs of rental operations:

Depreciation

12,893

23,278

8,243

44,414

Rental related services

21,876

1,398

8,606

31,880

Other

28,776

9,252

4,957

42,985

Total direct costs of rental operations

63,545

33,928

21,806

119,279

Costs of sales

13,982

4,093

843

6,485

25,403

Total costs of revenues

77,527

38,021

22,649

6,485

144,682

Gross Profit

Rental

58,227

22,605

12,437

93,269

Rental related services

8,380

54

2,043

10,477

Rental operations

66,607

22,659

14,480

103,746

Sales

8,423

5,812

358

2,871

17,464

Other

663

894

181

1,738

Total gross profit

75,693

29,365

15,019

2,871

122,948

Selling and administrative expenses

41,839

12,371

12,520

2,668

69,398

Income from operations

$

33,854

$

16,994

$

2,499

$

203

53,550

Interest expense

(4,040

)

Foreign currency exchange loss

(57

)

Provision for income taxes

(11,447

)

Net income

$

38,006

Other Information

Average rental equipment 1

$

876,529

$

342,526

$

313,498

Average monthly total yield 2

1.90

%

2.68

%

1.36

%

Average utilization 3

75.7

%

67.7

%

42.1

%

Average monthly rental rate 4

2.44

%

3.96

%

3.24

%

1.

Average rental equipment represents the cost of rental equipment, excluding accessory equipment. For Mobile Modular and Adler Tanks, Average rental equipment also excludes new equipment inventory.

2.

Average monthly total yield is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment for the period.

3.

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.

4.

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, 2020

(dollar amounts in thousands)

Mobile
Modular

TRS-
RenTelco

Adler Tanks

Enviroplex

Consolidated

Revenues

Rental

$

94,038

$

53,548

$

27,549

$

$

175,135

Rental related services

32,607

1,496

10,883

44,986

Rental operations

126,645

55,044

38,432

220,121

Sales

22,572

11,031

730

10,702

45,035

Other

743

1,067

160

1,970

Total revenues

149,960

67,142

39,322

10,702

267,126

Costs and Expenses

Direct costs of rental operations:

Depreciation

11,406

23,582

8,233

43,221

Rental related services

23,712

1,163

8,282

33,157

Other

24,993

7,942

4,683

37,618

Total direct costs of rental operations

60,111

32,687

21,198

113,996

Costs of sales

15,548

5,497

548

6,649

28,242

Total costs of revenues

75,659

38,184

21,746

6,649

142,238

Gross Profit

Rental

57,638

22,024

14,633

94,295

Rental related services

8,895

333

2,601

11,829

Rental operations

66,533

22,357

17,234

106,124

Sales

7,024

5,534

182

4,053

16,793

Other

744

1,067

160

1,971

Total gross profit

74,301

28,958

17,576

4,053

124,888

Selling and administrative expenses

34,275

12,236

13,177

2,806

62,494

Income from operations

$

40,026

$

16,722

$

4,399

$

1,247

62,394

Interest expense

(4,836

)

Foreign currency exchange gain

(319

)

Provision for income taxes

(14,531

)

Net income

$

42,708

Other Information

Average rental equipment 1

$

819,212

$

338,066

$

314,823

Average monthly total yield 2

1.90

%

2.64

%

1.46

%

Average utilization 3

78.2

%

64.7

%

45.9

%

Average monthly rental rate 4

2.45

%

4.08

%

3.18

%

1.

Average rental equipment represents the cost of rental equipment, excluding accessory equipment. For Mobile Modular and Adler Tanks, Average rental equipment also excludes new equipment inventory.

2.

Average monthly total yield is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment for the period.

3.

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.

4.

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 and share-based compensation. 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 the Company’s 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, including share-based compensation, 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. 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,

2021

2020

2021

2020

2021

2020

Net income

$

20,608

$

22,549

$

38,006

$

42,708

$

97,282

$

101,577

Provision for income taxes

6,739

8,076

11,447

14,531

26,976

34,571

Interest expense

2,257

2,184

4,040

4,836

7,991

10,921

Depreciation and amortization

27,099

23,801

50,559

47,663

97,539

94,052

EBITDA

56,703

56,610

104,052

109,738

229,788

241,121

Share-based compensation

1,820

1,501

3,597

3,224

5,922

6,370

Adjusted EBITDA 1

$

58,523

$

58,111

$

107,649

$

112,962

$

235,710

$

247,491

Adjusted EBITDA margin 2

40

%

42

%

40

%

42

%

41

%

42

%

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,

2021

2020

2021

2020

2021

2020

Adjusted EBITDA 1

$

58,523

$

58,111

$

107,649

$

112,962

$

235,710

$

247,491

Interest paid

(2,362

)

(2,172

)

(3,987

)

(5,031

)

(8,006

)

(11,296

)

Income taxes paid, net of refunds received

(6,618

)

(1,790

)

(6,990

)

(2,153

)

(39,740

)

(13,508

)

Gain on sale of used rental equipment

(7,076

)

(4,814

)

(11,870

)

(9,602

)

(21,597

)

(21,743

)

Foreign currency exchange loss (gain)

2

(117

)

57

319

(340

)

321

Amortization of debt issuance costs

3

2

6

5

12

11

Change in certain assets and liabilities:

Accounts receivable, net

(6,464

)

(106

)

(5,356

)

2,159

(2,732

)

(4,149

)

Prepaid expenses and other assets

(9,291

)

(2,004

)

(9,385

)

(1,641

)

(3,937

)

6,075

Accounts payable and other liabilities

30,785

5,858

20,400

(5,311

)

28,940

(3,717

)

Deferred income

2,871

(1,128

)

7,458

5,815

(7,346

)

(5,956

)

Net cash provided by operating activities

$

60,373

$

51,840

$

97,982

$

97,522

$

180,964

$

193,529

1.

Adjusted EBITDA is defined as net income before interest expense, provision for income taxes, depreciation, amortization and share-based compensation.

2.

Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by total revenues for the period.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210803005934/en/

Contacts

Keith E. Pratt
EVP & Chief Financial Officer
925-606-9200