McGrath RentCorp (NASDAQ: MGRC) (the “Company”), a diversified
business-to-business rental company, today announced total revenues
for the quarter ended June 30, 2022 of $177.0 million, an increase
of 21%, compared to the second quarter of 2021. The Company
reported net income of $26.1 million, or $1.07 per diluted share,
for the second quarter of 2022, compared to net income of $20.6
million, or $0.84 per diluted share, for the second quarter of
2021.
SECOND QUARTER 2022 YEAR-OVER-YEAR COMPANY
HIGHLIGHTS:
- Rental revenues increased 17% to $110.6 million.
- Total revenues increased 21% to $177.0 million.
- Adjusted EBITDA1 increased 13% to $66.3 million.
- Dividend rate increased 5% to $0.455 per share for the
second quarter of 2022. On an annualized basis, this dividend
represents a 2.2% yield on the July 27, 2022 close price of $81.18
per share.
Joe Hanna, President and CEO of McGrath RentCorp, made the
following comments regarding these results and future
expectations:
“We were very pleased with our second quarter results. Our 21%
growth in total company revenues was a result of strong performance
in both rental operations and sales revenues. Demand was healthy
across each of our rental segments. Mobile Modular rental revenues
grew 22%, with approximately half of the growth attributable to our
Design Space and Titan Storage Container acquisitions. Excluding
the acquisitions, the modular segment rental revenues grew by 11%.
Rental revenue growth was also strong at TRS-RenTelco and Adler
Tanks, which grew 7% and 18%, respectively.
Mobile Modular saw broad-based strength across our commercial,
education and portable storage customer bases. We responded to this
strong rental demand with increased capital spending to organically
grow our fleet to capture growth opportunities, while also
improving overall fleet utilization and increasing pricing.
Operating expenses were elevated as we continued to spend robustly
to prepare modular equipment for rent as we enter what is typically
our busiest time of year for new project shipments. Our initiatives
to also grow modular sales showed progress as sales revenues
increased by 68% compared to a year ago.
At TRS-RenTelco and Adler Tanks the positive trends we
experienced earlier this year continued in the second quarter.
TRS-RenTelco saw growth in both communications and general-purpose
rentals. Adler Tanks continued to experience broad-based demand
improvement across its regions and vertical markets.
We have delivered strong performance in the first half of the
year, and we have entered the second half with good momentum across
the business. As a result, we have increased our financial outlook
for the full year.”
DIVISION HIGHLIGHTS:
All comparisons presented below are for the quarter ended June
30, 2022 to the quarter ended June 30, 2021 unless otherwise
indicated.
MOBILE MODULAR
For the second quarter of 2022, the Company’s Mobile Modular
division reported income from operations of $23.9 million, an
increase of $5.8 million, or 32%, with Adjusted EBITDA increasing
$6.3 million, or 21%, to $35.8 million. Rental revenues increased
22% to $64.9 million, depreciation expense increased 10% to $7.7
million and other direct costs increased 51% to $24.1 million,
which resulted in an increase in gross profit on rental revenues of
9% to $33.1 million. The rental revenue increase reflects the 2021
Design Space and Titan Storage Containers customers that
contributed approximately one half of the increase. Rental related
services revenues increased 31% to $21.2 million, primarily
attributable to higher delivery and pick up activities, and higher
site related and other services performed during the lease with
associated gross profit increasing 39% to $6.1 million. Sales
revenues increased 68% to $24.8 million, from both higher used and
new equipment sales. Gross margin on sales was 41% compared to 39%
in 2021, resulting in a 75% increase in gross profit on sales
revenues to $10.1 million. Selling and administrative expenses
increased 14% to $25.8 million, primarily due to increased employee
salaries and benefit costs totaling $1.5 million reflecting the
addition of Design Space employees, and $1.3 million higher
allocated corporate expenses.
TRS-RENTELCO
For the second quarter of 2022, the Company’s TRS-RenTelco
division reported income from operations of $9.5 million, an
increase of $1.0 million, or 12%, with Adjusted EBITDA increasing
$1.1 million, or 5%, to $22.1 million. Rental revenues increased 7%
to $29.7 million, depreciation expense increased 3% to $12.3
million and other direct costs increased 15% to $5.4 million, which
resulted in a 6% increase in gross profit on rental revenues to
$11.9 million. The rental revenue increase was the result of higher
average equipment on rent and higher average monthly rental rates
compared to the prior year. Sales revenues increased 35% to $6.4
million and gross profit on sales revenues increased 23% to $3.6
million. Selling and administrative expenses increased 9% to $6.6
million, primarily due to higher employees’ salaries and benefit
costs.
ADLER TANKS
For the second quarter of 2022, the Company’s Adler Tanks
division reported income from operations of $3.9 million, an
increase of $2.2 million, with Adjusted EBITDA increasing $1.9
million, or 28%, to $8.6 million. Rental revenues increased $2.5
million, or 18%, to $16.0 million, depreciation expense decreased
4% to $4.0 million and other direct costs increased 24% to $3.3
million, which resulted in an increased gross profit on rental
revenues of 30%, to $8.7 million. The rental revenue increase was
broad based across regions and vertical markets served. Rental
related services revenues increased 17% to $6.8 million, with gross
profit on rental related services increasing 63%, to $1.7 million.
Selling and administrative expenses increased 12% to $7.0 million
primarily due to higher employees’ salaries and benefit costs.
FINANCIAL OUTLOOK:
Based upon the Company’s year-to-date results and current
outlook for the remainder of the year, the Company is raising its
financial outlook. For the full-year 2022, the Company expects:
Previous
Current
Total revenue:
$675 million to $705 million
$695 million to $720 million
Adjusted EBITDA1, 2:
$260 million to $275 million
$266 million to $276 million
Gross rental equipment capital
expenditures:
$117 million to $127 million
$145 million to $155 million
- 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.
- 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 June 30, 2022,
McGrath RentCorp will host a conference call at 5:00 p.m. Eastern
Time (2:00 p.m. Pacific Time) on July 28, 2022 to discuss the
second quarter 2022 results. To participate in the teleconference,
dial 1-800-445-7795 (in the U.S.), or 1-203-518-9848 (outside the
U.S.), or to listen only, access the simultaneous webcast at the
investor relations section of the Company’s website at
https://investors.mgrc.com/. A replay will be available for 7 days
following the call by dialing 1-800-839-6975 (in the U.S.), or
1-402-220-6061 (outside the U.S.). In addition, a live audio
webcast and replay of the call may be found in the investor
relations section of the Company’s website at
https://investors.mgrc.com/events-and-presentations.
FORWARD-LOOKING STATEMENTS:
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. All statements, other than statements of historical facts,
regarding McGrath RentCorp’s expectations, strategies, prospects or
targets are forward looking statements. These forward-looking
statements also can be identified by the use of forward-looking
terminology such as “anticipates,” “believes,” “continues,”
“could,” “estimates,” “expects,” “intends,” “may,” “plan,”
“predict,” “project,” or “will,” or the negative of these terms or
other comparable terminology. In particular, Mr. Hanna’s statements
about spending robustly to prepare modular equipment for rent and
the expectation of demand in the following quarter due to
seasonality, as well as the statements regarding the full year 2022
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 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; our ability to successfully increase prices to offset
cost increases; 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)
2022
2021
2022
2021
Revenues
Rental
$
110,624
$
94,581
$
214,865
$
180,668
Rental related services
28,819
22,688
53,136
42,357
Rental operations
139,443
117,269
268,001
223,025
Sales
36,471
28,256
52,347
42,867
Other
1,117
910
2,056
1,738
Total revenues
177,031
146,435
322,404
267,630
Costs and
Expenses
Direct costs of rental operations:
Depreciation of rental equipment
24,064
23,159
47,938
44,414
Rental related services
20,853
17,276
38,996
31,880
Other
32,825
23,278
60,648
42,985
Total direct costs of rental
operations
77,742
63,713
147,582
119,279
Costs of sales
21,452
16,855
30,496
25,403
Total costs of revenues
99,194
80,568
178,078
144,682
Gross profit
77,837
65,867
144,326
122,948
Selling and administrative expenses
40,788
36,261
79,915
69,398
Income from operations
37,049
29,606
64,411
53,550
Other expense:
Interest expense
(3,001
)
(2,257
)
(5,821
)
(4,040
)
Foreign currency exchange loss
(181
)
(2
)
(168
)
(57
)
Income before provision for income
taxes
33,867
27,347
58,422
49,453
Provision for income taxes
7,730
6,739
13,492
11,447
Net income
$
26,137
$
20,608
$
44,930
$
38,006
Earnings per share:
Basic
$
1.07
$
0.85
$
1.85
$
1.57
Diluted
$
1.07
$
0.84
$
1.83
$
1.55
Shares used in per share calculation:
Basic
24,360
24,229
24,323
24,191
Diluted
24,509
24,494
24,522
24,505
Cash dividends declared per share
$
0.455
$
0.435
$
0.910
$
0.870
MCGRATH RENTCORP
CONDENSED CONSOLIDATED BALANCE
SHEETS
(UNAUDITED)
June 30,
December 31,
(in thousands)
2022
2021
Assets
Cash
$
874
$
1,491
Accounts receivable, net of allowance for
credit losses of $2,125 in 2022
and 2021
167,329
159,499
Rental equipment, at cost:
Relocatable modular buildings
1,075,898
1,040,094
Electronic test equipment
389,383
361,391
Liquid and solid containment tanks and
boxes
309,010
309,908
1,774,291
1,711,393
Less: accumulated depreciation
(676,766
)
(646,169
)
Rental equipment, net
1,097,525
1,065,224
Property, plant and equipment, net
137,465
135,325
Prepaid expenses and other assets
65,800
54,945
Intangible assets, net
44,086
47,049
Goodwill
132,305
132,393
Total assets
$
1,645,384
$
1,595,926
Liabilities and Shareholders'
Equity
Liabilities:
Notes payable
$
441,460
$
426,451
Accounts payable and accrued
liabilities
137,729
136,313
Deferred income
77,551
58,716
Deferred income taxes, net
236,610
242,425
Total liabilities
893,350
863,905
Shareholders’ equity:
Common stock, no par value - Authorized
40,000 shares
Issued and outstanding - 24,378 shares as
of June 30, 2022 and 24,260 shares as of December 31, 2021
105,894
108,610
Retained earnings
646,130
623,465
Accumulated other comprehensive income
(loss)
10
(54
)
Total shareholders’ equity
752,034
732,021
Total liabilities and shareholders’
equity
$
1,645,384
$
1,595,926
MCGRATH RENTCORP
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended June
30,
(in thousands)
2022
2021
Cash Flows from Operating
Activities:
Net income
$
44,930
$
38,006
Adjustments to reconcile net income to net
cash provided by
operating activities:
Depreciation and amortization
55,355
50,559
Deferred income taxes
(5,815
)
7,268
Provision for doubtful accounts
49
138
Share-based compensation
3,412
3,597
Gain on sale of used rental equipment
(16,093
)
(11,870
)
Foreign currency exchange loss
168
57
Amortization of debt issuance costs
9
6
Change in:
Accounts receivable
(7,879
)
(5,494
)
Prepaid expenses and other assets
(10,855
)
(9,385
)
Accounts payable and accrued
liabilities
(73
)
17,642
Deferred income
18,835
7,458
Net cash provided by operating
activities
82,043
97,982
Cash Flows from Investing
Activities:
Purchases of rental equipment
(94,820
)
(58,902
)
Purchases of property, plant and
equipment
(6,594
)
(2,272
)
Cash paid for acquisition of
businesses
—
(284,341
)
Proceeds from sales of used rental
equipment
31,830
24,674
Net cash used in investing activities
(69,584
)
(320,841
)
Cash Flows from Financing
Activities:
Net borrowings under bank lines of
credit
15,000
189,983
Borrowings under note purchase
agreement
—
60,000
Taxes paid related to net share settlement
of stock awards
(6,128
)
(4,828
)
Payment of dividends
(22,083
)
(21,089
)
Net cash (used in) provided by financing
activities
(13,211
)
224,066
Effect of foreign currency exchange rate
changes on cash
135
(33
)
Net (decrease) increase in cash
(617
)
1,174
Cash balance, beginning of period
1,491
1,238
Cash balance, end of period
$
874
$
2,412
Supplemental Disclosure of Cash Flow
Information:
Interest paid, during the period
$
5,821
$
3,987
Net income taxes paid, during the
period
$
17,078
$
6,990
Dividends accrued during the period, not
yet paid
$
11,009
$
9,918
Rental equipment acquisitions, not yet
paid
$
6,906
$
8,502
MCGRATH RENTCORP
BUSINESS SEGMENT DATA
(unaudited)
Three months ended June 30,
2022
(dollar amounts in thousands)
Mobile Modular
TRS- RenTelco
Adler Tanks
Enviroplex
Consolidated
Revenues
Rental
$
64,949
$
29,718
$
15,957
$
—
$
110,624
Rental related services
21,233
813
6,773
—
28,819
Rental operations
86,182
30,531
22,730
—
139,443
Sales
24,816
6,404
601
4,650
36,471
Other
379
406
332
—
1,117
Total revenues
111,377
37,341
23,663
4,650
177,031
Costs and Expenses
Direct costs of rental operations:
Depreciation
7,749
12,333
3,982
—
24,064
Rental related services
15,116
664
5,073
—
20,853
Other
24,073
5,443
3,309
—
32,825
Total direct costs of rental
operations
46,938
18,440
12,364
—
77,742
Costs of sales
14,760
2,765
418
3,509
21,452
Total costs of revenues
61,698
21,205
12,782
3,509
99,194
Gross Profit
Rental
33,127
11,942
8,666
—
53,735
Rental related services
6,117
149
1,700
—
7,966
Rental operations
39,244
12,091
10,366
—
61,701
Sales
10,056
3,639
183
1,141
15,019
Other
379
406
332
—
1,117
Total gross profit
49,679
16,136
10,881
1,141
77,837
Selling and administrative expenses
25,755
6,614
6,979
1,440
40,788
Income (loss) from operations
$
23,924
$
9,522
$
3,902
$
(299
)
37,049
Interest expense
(3,001
)
Foreign currency exchange loss
(181
)
Provision for income taxes
(7,730
)
Net income
$
26,137
Other Information
Adjusted EBITDA 1
$
35,773
$
22,128
$
8,620
$
(230
)
$
66,291
Average rental equipment 2
$
1,019,927
$
382,068
$
307,402
Average monthly total yield 3
2.12
%
2.59
%
1.73
%
Average utilization 4
78.1
%
64.5
%
51.6
%
Average monthly rental rate 5
2.72
%
4.02
%
3.35
%
- Adjusted EBITDA is defined as net income before interest
expense, provision for income taxes, depreciation, amortization,
non-cash impairment costs and share-based compensation.
- 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.
- 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,
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 loss
(2
)
Provision for income taxes
(6,739
)
Net income
$
20,608
Other Information
Adjusted EBITDA 1
$
29,518
$
21,019
$
6,736
$
1,250
$
58,523
Average rental equipment 2
$
906,653
$
349,480
$
313,108
Average monthly total yield 3
1.96
%
2.66
%
1.44
%
Average utilization 4
75.5
%
67.7
%
44.0
%
Average monthly rental rate 5
2.59
%
3.93
%
3.27
%
- Adjusted EBITDA is defined as net income before interest
expense, provision for income taxes, depreciation, amortization,
non-cash impairment costs and share-based compensation.
- 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.
- 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, 2022
(dollar amounts in thousands)
Mobile Modular
TRS-RenTelco
Adler Tanks
Enviroplex
Consolidated
Revenues
Rental
$
126,487
$
58,230
$
30,148
$
—
$
214,865
Rental related services
39,594
1,484
12,058
—
53,136
Rental operations
166,081
59,714
42,206
—
268,001
Sales
35,191
10,331
1,258
5,567
52,347
Other
750
787
519
—
2,056
Total revenues
202,022
70,832
43,983
5,567
322,404
Costs and Expenses
Direct costs of rental operations:
Depreciation
15,582
24,362
7,994
—
47,938
Rental related services
28,296
1,244
9,456
—
38,996
Other
44,235
10,135
6,278
—
60,648
Total direct costs of rental
operations
88,113
35,741
23,728
—
147,582
Costs of sales
21,089
4,265
920
4,222
30,496
Total costs of revenues
109,202
40,006
24,648
4,222
178,078
Gross Profit
Rental
66,670
23,733
15,876
—
106,279
Rental related services
11,298
240
2,602
—
14,140
Rental operations
77,968
23,973
18,478
—
120,419
Sales
14,102
6,066
338
1,345
21,851
Other
750
787
519
—
2,056
Total gross profit
92,820
30,826
19,335
1,345
144,326
Selling and administrative expenses
50,447
13,204
13,501
2,763
79,915
Income (loss) from operations
$
42,373
$
17,622
$
5,834
$
(1,418
)
64,411
Interest expense
(5,821
)
Foreign currency exchange loss
(168
)
Provision for income taxes
(13,492
)
Net income
$
44,930
Other Information
Adjusted EBITDA 1
$
66,178
$
42,781
$
15,327
$
(1,276
)
$
123,010
Average rental equipment 2
$
1,013,361
$
374,364
$
307,985
Average monthly total yield 3
2.08
%
2.59
%
1.63
%
Average utilization 4
77.6
%
64.6
%
49.9
%
Average monthly rental rate 5
2.68
%
4.02
%
3.27
%
- Adjusted EBITDA is defined as net income before interest
expense, provision for income taxes, depreciation, amortization,
non-cash impairment costs and share-based compensation.
- 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.
- 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, 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
Adjusted EBITDA 1
$
53,473
$
41,411
$
12,436
$
329
$
107,649
Average rental equipment 2
$
876,529
$
342,526
$
313,498
Average monthly total yield 3
1.90
%
2.68
%
1.36
%
Average utilization 4
75.7
%
67.7
%
42.1
%
Average monthly rental rate 5
2.44
%
3.96
%
3.24
%
- Adjusted EBITDA is defined as net income before interest
expense, provision for income taxes, depreciation, amortization,
non-cash impairment costs and share-based compensation.
- 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.
- 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 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,
2022
2021
2022
2021
2022
2021
Net income
$
26,137
$
20,608
$
44,930
$
38,006
$
96,629
$
97,282
Provision for income taxes
7,730
6,739
13,492
11,447
34,096
26,976
Interest expense
3,001
2,257
5,821
4,040
12,236
7,991
Depreciation and amortization
27,771
27,099
55,355
50,559
111,491
97,539
EBITDA
64,639
56,703
119,598
104,052
254,452
229,788
Share-based compensation
1,652
1,820
3,412
3,597
7,481
5,922
Adjusted EBITDA 1
$
66,291
$
58,523
$
123,010
$
107,649
$
261,933
$
235,710
Adjusted EBITDA margin 2
37
%
40
%
38
%
40
%
39
%
41
%
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,
2022
2021
2022
2021
2022
2021
Adjusted EBITDA 1
$
66,291
$
58,523
$
123,010
$
107,649
$
261,933
$
235,710
Interest paid
(3,684
)
(2,362
)
(5,821
)
(3,987
)
(12,160
)
(8,006
)
Income taxes paid, net of refunds
received
(16,658
)
(6,618
)
(17,078
)
(6,990
)
(19,175
)
(39,740
)
Gain on sale of used rental equipment
(10,729
)
(7,076
)
(16,093
)
(11,870
)
(29,664
)
(21,597
)
Foreign currency exchange loss (gain)
181
2
168
57
321
(340
)
Amortization of debt issuance costs
5
3
9
6
18
12
Change in certain assets and
liabilities:
Accounts receivable, net
(15,765
)
(6,464
)
(7,830
)
(5,356
)
(26,420
)
(2,732
)
Prepaid expenses and other assets
(15,068
)
(9,291
)
(10,855
)
(9,385
)
(8,286
)
(3,937
)
Accounts payable and other liabilities
12,115
30,785
(2,302
)
20,400
(7,221
)
28,940
Deferred income
13,612
2,871
18,835
7,458
20,459
(7,346
)
Net cash provided by operating
activities
$
30,300
$
60,373
$
82,043
$
97,982
$
179,805
$
180,964
- Adjusted EBITDA is defined as net income before interest
expense, provision for income taxes, depreciation, amortization and
share-based compensation.
- 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/20220727006128/en/
Keith E. Pratt EVP & Chief Financial Officer
925-606-9200
McGrath RentCorp (NASDAQ:MGRC)
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