McGrath RentCorp (MGRC)
Chart Events
Performance Outlook
| Previous Close | 71.72 |
| Open | 72.04 |
| Bid | 71.98 x 800 |
| Ask | 72.24 x 1100 |
| Day's Range | 71.27 - 72.58 |
| 52 Week Range | 44.32 - 83.95 |
| Volume | 38,361 |
| Avg. Volume | 87,941 |
| Market Cap | 1.775B |
| Beta (5Y Monthly) | 0.98 |
| PE Ratio (TTM) | 18.35 |
| EPS (TTM) | N/A |
| Earnings Date | N/A |
| Forward Dividend & Yield | 1.68 (2.34%) |
| Ex-Dividend Date | Jan 14, 2021 |
| 1y Target Est | N/A |
- Business Wire
McGrath RentCorp Announces Smita Conjeevaram Elected to Board
McGrath RentCorp (NASDAQ: MGRC) (the "Company"), a diversified business-to-business rental company, today announced the appointment of Smita Conjeevaram to the Company’s Board of Directors.
- Business Wire
McGrath RentCorp Declares Quarterly Dividend
The Board of Directors of McGrath RentCorp (NASDAQ:MGRC), a diversified business-to-business rental company declared a quarterly cash dividend of $0.42 per common share for the quarter ended December 31, 2020. The dividend will be payable on January 29, 2021 to all shareholders of record on January 15, 2021. The year 2020 marks the 29th consecutive year that McGrath RentCorp has raised its dividend to shareholders.
- GlobeNewswire
McGrath RentCorp Announces Results for Third Quarter 2020
LIVERMORE, Calif., Oct. 29, 2020 (GLOBE NEWSWIRE) -- McGrath RentCorp (NASDAQ: MGRC) (the “Company”), a diversified business-to-business rental company, today announced total revenues for the quarter ended September 30, 2020 of $156.4 million, a decrease of 10%, compared to the third quarter of 2019. The Company reported net income of $28.1 million, or $1.15 per diluted share, for the third quarter of 2020, compared to net income of $32.5 million, or $1.32 per diluted share, for the third quarter of 2019.THIRD QUARTER 2020 COMPANY HIGHLIGHTS: * Income from operations decreased 20% year-over-year to $37.3 million. * Rental revenues decreased 3% year-over-year to $88.1 million. * Adjusted EBITDA1 decreased 11% year-over-year to $62.7 million. * Dividend rate increased 12% year-over-year to $0.42 per share for the third quarter of 2020. On an annualized basis, this dividend represents a 2.9% yield on the October 28, 2020 close price of $58.40 per share.Joe Hanna, President and CEO of McGrath RentCorp, made the following comments regarding these results and future expectations:“For the third quarter, rental revenue growth of 1% at Mobile Modular and 3% at TRS-RenTelco was offset by a 22% decline at Adler, resulting in an overall 3% decrease for the Company. Rental revenue performance by end markets and geographic locations was varied and still affected by COVID-19 uncertainty. The decrease in total Company revenues was primarily a result of lower new equipment sales revenues at our Enviroplex business, which in 2019 had a large concentration of sales completed in the third quarter. Disciplined expense management continued in our production centers and support services, reflecting softer demand conditions.Our third quarter results reflect slowly improving market conditions compared to the second quarter and we were pleased with how the business performed on an overall basis, despite uncertainty due to COVID-19. Sequentially, each of our three divisions grew rental revenues from the second to third quarter 2020. After withdrawing guidance in the second quarter, we set milestones for performance in the third quarter and landed high in our ranges for total revenues and EBITDA while maintaining discipline on rental equipment capital expenditures. Our teams successfully navigated difficult circumstances and delivered solid results.Entering the fourth quarter of 2020, we are seeing the generally improved third quarter business conditions continuing, despite the pandemic uncertainties. We remain focused on consistent execution for our customers and we are working hard to finish the year on solid footing.”DIVISION HIGHLIGHTS:All comparisons presented below are for the quarter ended September 30, 2020 to the quarter ended September 30, 2019 unless otherwise indicated.MOBILE MODULARFor the third quarter of 2020, the Company’s Mobile Modular division reported income from operations of $24.9 million, an increase of $2.7 million, or 12%. Rental revenues increased 1% to $47.1 million, depreciation expense increased 4% to $5.8 million and other direct costs decreased 8% to $11.8 million, which resulted in an increase in gross profit on rental revenues of 4% to $29.6 million. The rental revenue growth was due to increased demand from education customers. Rental related services revenues decreased 17% to $18.7 million, with associated gross profit decreasing 10% to $5.2 million. Sales revenues increased 76% to $29.3 million, primarily due to higher new equipment sales with gross margin on sales decreasing to 26% from 28%, resulting in a 60% increase in gross profit on sales revenues to $7.5 million. Selling and administrative expenses increased 5% to $17.7 million, primarily due to higher allocated corporate expenses.TRS-RENTELCOFor the third quarter of 2020, the Company’s TRS-RenTelco division reported income from operations of $9.0 million, a decrease of $1.1 million, or 11%. Rental revenues increased 3% to $27.6 million, depreciation expense increased 6% to $11.5 million and other direct costs increased 18% to $4.8 million, which resulted in a 6% decrease in gross profit on rental revenues to $11.3 million. The rental revenue growth was due to increased demand from general purpose test equipment customers. Sales revenues increased 22% to $6.9 million. Gross margin on sales was 44% in 2020 compared to 60% in 2019, resulting in a 10% decrease in gross profit on sales revenues to $3.1 million. Selling and administrative expenses decreased 1% to $6.0 million.ADLER TANKSFor the third quarter of 2020, the Company’s Adler Tanks division reported income from operations of $2.7 million, a decrease of $2.4 million, or 47%. Rental revenues decreased 22% to $13.4 million, depreciation expense was flat at $4.1 million and other direct costs decreased 29% to $2.0 million, which resulted in a 29% decrease in gross profit on rental revenues to $7.3 million. The rental revenue decrease was primarily due to COVID-19 related business disruptions and a decrease in the price of oil and gas, which contributed to weaker activities in multiple geographic and market segments. Rental related services revenues decreased 25% to $5.6 million, with gross profit on rental related services decreasing 39% to $1.1 million. Selling and administrative expenses decreased 19% to $5.8 million, primarily due to decreased allocated corporate expenses, lower marketing and administrative costs and decreased salaries and employee benefit costs.FINANCIAL OUTLOOK:For the fourth quarter 2020, the Company expects: * Total revenue: $140 million - $150 million * Adjusted EBITDA1,2: $58 million - $63 million * Gross rental equipment capital expenditures: $10 million to $13 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.comYou 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 October 1, 2020, McGrath RentCorp will host a conference call at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) on October 29, 2020 to discuss the third quarter 2020 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 5478927. 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 comments about seeing the generally improved business conditions continuing, despite the pandemic uncertainties and the Company working hard to finish the year on solid footing as well as the statements regarding the fourth quarter 2020 outlook 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 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-Q for the period ended September 30, 2020.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 September 30, Nine Months Ended September 30, (in thousands, except per share amounts) 2020 2019 2020 2019 Revenues Rental $88,138 $90,857 $263,273 $261,658 Rental related services 25,040 30,816 70,026 76,738 Rental operations 113,178 121,673 333,299 338,396 Sales 42,331 50,855 87,366 81,387 Other 939 1,034 2,909 3,226 Total revenues 156,448 173,562 423,574 423,009 Costs and Expenses Direct costs of rental operations: Depreciation of rental equipment 21,419 20,535 64,640 59,222 Rental related services 18,603 23,007 51,760 57,507 Other 18,553 19,654 56,171 61,128 Total direct costs of rental operations 58,575 63,196 172,571 177,857 Costs of sales 29,669 32,084 57,911 49,984 Total costs of revenues 88,244 95,280 230,482 227,841 Gross profit 68,204 78,282 193,093 195,168 Selling and administrative expenses 30,871 31,534 93,365 92,044 Income from operations 37,333 46,748 99,728 103,124 Other income (expense): Interest expense (1,968) (3,161) (6,804) (9,407) Foreign currency exchange gain (loss) 130 (132) (189) (46) Income before provision for income taxes 35,495 43,455 92,735 93,671 Provision for income taxes 7,394 10,987 21,926 23,266 Net income $28,101 $32,468 $70,809 $70,405 Earnings per share: Basic $1.17 $1.34 $2.93 $2.90 Diluted $1.15 $1.32 $2.88 $2.86 Shares used in per share calculation: Basic 24,097 24,268 24,170 24,237 Diluted 24,443 24,632 24,558 24,592 Cash dividends declared per share $0.420 $0.375 $1.260 $1.125 MCGRATH RENTCORP CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) September 30, December 31, (in thousands) 2020 2019 Assets Cash $1,543 $2,342 Accounts receivable, net of allowance for doubtful accounts of $2,200 in 2020 and $1,883 in 2019 129,433 128,099 Rental equipment, at cost: Relocatable modular buildings 885,314 868,807 Electronic test equipment 335,520 335,343 Liquid and solid containment tanks and boxes 316,110 316,261 1,536,944 1,520,411 Less accumulated depreciation (588,819) (552,911) Rental equipment, net 948,125 967,500 Property, plant and equipment, net 134,245 131,047 Prepaid expenses and other assets 46,670 45,356 Intangible assets, net 7,167 7,334 Goodwill 28,197 28,197 Total assets $1,295,380 $1,309,875 Liabilities and Shareholders' Equity Liabilities: Notes payable $249,980 $293,431 Accounts payable and accrued liabilities 108,824 109,174 Deferred income 58,555 54,964 Deferred income taxes, net 216,407 218,270 Total liabilities 633,766 675,839 Shareholders’ equity: Common stock, no par value - Authorized 40,000 shares Issued and outstanding - 24,111 shares as of September 30, 2020 and 24,296 shares as of December 31, 2019 106,079 106,360 Retained earnings 555,555 527,746 Accumulated other comprehensive loss (20) (70) Total shareholders’ equity 661,614 634,036 Total liabilities and shareholders’ equity $1,295,380 $1,309,875 MCGRATH RENTCORP CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Nine Months Ended September 30, (in thousands) 2020 2019 Cash Flows from Operating Activities: Net income $70,809 $70,405 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 71,249 65,960 Provision for doubtful accounts 1,227 655 Share-based compensation 4,894 4,096 Gain on sale of used rental equipment (14,110) (15,168) Foreign currency exchange loss 189 46 Amortization of debt issuance costs 8 8 Change in: Accounts receivable (2,561) (16,929) Prepaid expenses and other assets (1,314) (11,734) Accounts payable and accrued liabilities (582) 19,304 Deferred income 3,591 10,946 Deferred income taxes (1,863) 9,280 Net cash provided by operating activities 131,537 136,869 Cash Flows from Investing Activities: Purchases of rental equipment (65,661) (127,243) Purchases of property, plant and equipment (9,639) (6,845) Cash paid for acquisition of business assets — (7,401) Proceeds from sales of used rental equipment 33,837 30,844 Net cash used in investing activities (41,463) (110,645) Cash Flows from Financing Activities: Net (repayment) borrowing under bank lines of credit (43,460) 2,897 Repurchase of common stock (13,617) — Taxes paid related to net share settlement of stock awards (3,930) (1,864) Payment of dividends (29,642) (26,432) Net cash used in financing activities (90,649) (25,399) Effect of foreign currency exchange rate changes on cash (224) (43) Net (decrease) increase in cash (799) 782 Cash balance, beginning of period 2,342 1,508 Cash balance, end of period $1,543 $2,290 Supplemental Disclosure of Cash Flow Information: Interest paid, during the period $6,829 $9,359 Net income taxes paid, during the period $24,704 $10,030 Dividends accrued during the period, not yet paid $10,355 $9,241 Rental equipment acquisitions, not yet paid $5,827 $9,450 BUSINESS SEGMENT DATA (unaudited) Three months ended September 30, 2020 (dollar amounts in thousands) Mobile Modular TRS-RenTelco Adler Tanks Enviroplex Consolidated Revenues Rental $47,134 $27,619 $13,385 $— $88,138 Rental related services 18,684 800 5,556 — 25,040 Rental operations 65,818 28,419 18,941 — 113,178 Sales 29,275 6,912 230 5,914 42,331 Other 320 525 94 — 939 Total revenues 95,413 35,856 19,265 5,914 156,448 Costs and Expenses Direct costs of rental operations: Depreciation 5,771 11,547 4,101 — 21,419 Rental related services 13,510 673 4,420 — 18,603 Other 11,780 4,820 1,953 — 18,553 Total direct costs of rental operations 31,061 17,040 10,474 — 58,575 Costs of sales 21,726 3,853 251 3,839 29,669 Total costs of revenues 52,787 20,893 10,725 3,839 88,244 Gross Profit (Loss) Rental 29,583 11,252 7,331 — 48,166 Rental related services 5,174 127 1,136 — 6,437 Rental operations 34,757 11,379 8,467 — 54,603 Sales 7,549 3,059 (21) 2,075 12,662 Other 320 525 94 — 939 Total gross profit 42,626 14,963 8,540 2,075 68,204 Selling and administrative expenses 17,739 5,962 5,821 1,349 30,871 Income from operations $24,887 $9,001 $2,719 $726 37,333 Interest expense (1,968) Foreign currency exchange loss 130 Provision for income taxes (7,394) Net income $28,101 Other Information Average rental equipment 1 $829,460 $336,015 $314,933 Average monthly total yield 2 1.89% 2.74% 1.42% Average utilization 3 76.3% 67.1% 44.1% Average monthly rental rate 4 2.48% 4.08% 3.21% 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 September 30, 2019 (dollar amounts in thousands) Mobile Modular TRS-RenTelco Adler Tanks Enviroplex Consolidated Revenues Rental $46,738 $26,938 $17,181 $— $90,857 Rental related services 22,574 863 7,379 — 30,816 Rental operations 69,312 27,801 24,560 — 121,673 Sales 16,676 5,678 140 28,361 50,855 Other 314 611 109 — 1,034 Total revenues 86,302 34,090 24,809 28,361 173,562 Costs and Expenses Direct costs of rental operations: Depreciation 5,572 10,849 4,114 — 20,535 Rental related services 16,799 695 5,513 — 23,007 Other 12,804 4,088 2,762 — 19,654 Total direct costs of rental operations 35,175 15,632 12,389 — 63,196 Costs of sales 11,963 2,277 126 17,718 32,084 Total costs of revenues 47,138 17,909 12,515 17,718 95,280 Gross Profit Rental 28,362 12,001 10,305 — 50,668 Rental related services 5,775 168 1,866 — 7,809 Rental operations 34,137 12,169 12,171 — 58,477 Sales 4,713 3,401 14 10,643 18,771 Other 314 611 109 — 1,034 Total gross profit 39,164 16,181 12,294 10,643 78,282 Selling and administrative expenses 16,966 6,038 7,160 1,370 31,534 Income from operations $22,198 $10,143 $5,134 $9,273 46,748 Interest expense (3,161) Foreign currency exchange loss (132) Provision for income taxes (10,987) Net income $32,468 Other Information Average rental equipment 1 $802,718 $314,428 $314,314 Average monthly total yield 2 1.94% 2.86% 1.82% Average utilization 3 79.4% 66.9% 54.5% Average monthly rental rate 4 2.45% 4.27% 3.34% 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) Nine months ended September 30, 2020 (dollar amounts in thousands) Mobile Modular TRS-RenTelco Adler Tanks Enviroplex Consolidated Revenues Rental $141,172 $81,167 $40,934 $— $263,273 Rental related services 51,291 2,296 16,439 — 70,026 Rental operations 192,463 83,463 57,373 — 333,299 Sales 51,847 17,943 960 16,616 87,366 Other 1,063 1,592 254 — 2,909 Total revenues 245,373 102,998 58,587 16,616 423,574 Costs and Expenses Direct costs of rental operations: Depreciation 17,177 35,129 12,334 — 64,640 Rental related services 37,222 1,836 12,702 — 51,760 Other 36,773 12,762 6,636 — 56,171 Total direct costs of rental operations 91,172 49,727 31,672 — 172,571 Costs of sales 37,274 9,350 799 10,488 57,911 Total costs of revenues 128,446 59,077 32,471 10,488 230,482 Gross Profit Rental 87,222 33,276 21,964 — 142,462 Rental related services 14,069 460 3,737 — 18,266 Rental operations 101,291 33,736 25,701 — 160,728 Sales 14,573 8,593 161 6,128 29,455 Other 1,064 1,592 254 — 2,910 Total gross profit 116,928 43,921 26,116 6,128 193,093 Selling and administrative expenses 52,014 18,198 18,998 4,155 93,365 Income from operations $64,914 $25,723 $7,118 $1,973 99,728 Interest expense (6,804) Foreign currency exchange loss (189) Provision for income taxes (21,926) Net income $70,809 Other Information Average rental equipment 1 $822,723 $337,330 $314,859 Average monthly total yield 2 1.89% 2.67% 1.44% Average utilization 3 77.5% 65.6% 45.5% Average monthly rental rate 4 2.46% 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. MCGRATH RENTCORP BUSINESS SEGMENT DATA (unaudited) Nine months ended September 30, 2019 (dollar amounts in thousands) Mobile Modular TRS-RenTelco Adler Tanks Enviroplex Consolidated Revenues Rental $133,736 $76,050 $51,872 $— $261,658 Rental related services 52,946 2,425 21,367 — 76,738 Rental operations 186,682 78,475 73,239 — 338,396 Sales 31,401 16,745 1,003 32,238 81,387 Other 1,033 1,856 337 — 3,226 Total revenues 219,116 97,076 74,579 32,238 423,009 Costs and Expenses Direct costs of rental operations: Depreciation 16,449 30,533 12,240 — 59,222 Rental related services 39,454 2,008 16,045 — 57,507 Other 39,721 12,206 9,201 — 61,128 Total direct costs of rental operations 95,624 44,747 37,486 — 177,857 Costs of sales 21,463 7,656 713 20,152 49,984 Total costs of revenues 117,087 52,403 38,199 20,152 227,841 Gross Profit Rental 77,566 33,311 30,431 — 141,308 Rental related services 13,492 417 5,322 — 19,231 Rental operations 91,058 33,728 35,753 — 160,539 Sales 9,938 9,089 290 12,086 31,403 Other 1,033 1,856 337 — 3,226 Total gross profit 102,029 44,673 36,380 12,086 195,168 Selling and administrative expenses 48,013 18,101 22,054 3,876 92,044 Income from operations $54,016 $26,572 $14,326 $8,210 103,124 Interest expense (9,407) Foreign currency exchange loss (46) Provision for income taxes (23,266) Net income $70,405 Other Information Average rental equipment 1 $789,664 $299,210 $313,475 Average monthly total yield 2 1.88% 2.82% 1.84% Average utilization 3 79.1% 66.0% 56.2% Average monthly rental rate 4 2.38% 4.28% 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. Reconciliation of Adjusted EBITDA to the most directly comparable GAAP measuresTo 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 September 30, Nine Months Ended September 30, Twelve Months Ended September 30, 2020 2019 2020 2019 2020 2019 Net income $28,101 $32,468 $70,809 $70,405 $97,210 $94,654 Provision for income taxes 7,395 10,987 21,926 23,266 30,979 31,035 Interest expense 1,968 3,161 6,804 9,407 9,728 12,571 Depreciation and amortization 23,586 22,873 71,249 65,960 94,765 87,039 EBITDA 61,050 69,489 170,788 169,038 232,682 225,299 Share-based compensation 1,670 1,350 4,894 4,096 6,690 5,397 Adjusted EBITDA 1 $62,720 $70,839 $175,682 $173,134 $239,372 $230,696 Adjusted EBITDA margin 2 40% 41% 41% 41% 42% 41% Reconciliation of Adjusted EBITDA to Net Cash Provided by Operating Activities(dollar amounts in thousands) Three Months Ended September 30, Nine Months Ended September 30, Twelve Months Ended September 30, 2020 2019 2020 2019 2020 2019 Adjusted EBITDA 1 $62,720 $70,839 $175,682 $173,134 $239,372 $230,696 Interest paid (1,798) (3,149) (6,829) (9,359) (9,945) (12,764) Income taxes paid, net of refunds received (22,551) (3,857) (24,704) (10,030) (32,202) (12,132) Gain on sale of used rental equipment (4,508) (6,000) (14,110) (15,168) (20,251) (19,683) Foreign currency exchange loss (gain) (130) 132 189 46 59 30 Amortization of debt issuance costs 3 3 8 8 11 10 Change in certain assets and liabilities: Accounts receivable, net (3,493) (16,272) (1,334) (16,274) 8,630 (22,201) Prepaid expenses and other assets 327 9,512 (1,314) (11,734) (3,110) (10,890) Accounts payable and other liabilities 5,669 (363) 358 15,300 2,315 17,167 Deferred income (2,224) (5,963) 3,591 10,946 (2,217) 12,463 Net cash provided by operating activities $34,015 $44,882 $131,537 $136,869 $182,662 $182,696 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. FOR INFORMATION CONTACT:Keith E. Pratt EVP & Chief Financial Officer 925-606-9200
