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Share Name | Share Symbol | Market | Type |
---|---|---|---|
McGrath RentCorp | NASDAQ:MGRC | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.12 | 0.11% | 112.78 | 112.78 | 113.00 | 113.28 | 112.21 | 113.28 | 15,817 | 15:00:16 |
McGrath RentCorp (“McGrath” or the “Company”) (Nasdaq: MGRC), a leading business-to-business rental company in North America, today announced total revenues from continuing operations for the quarter ended March 31, 2024 of $187.8 million, an increase of 15% compared to the first quarter of 2023. The Company reported net income from continuing operations of $22.8 million, or $0.93 per diluted share, for the first quarter of 2024, compared to net income from continuing operations of $11.5 million, or $0.47 per diluted share, for the first quarter of 2023.
FIRST QUARTER 2024 YEAR-OVER-YEAR COMPANY HIGHLIGHTS (FROM CONTINUING OPERATIONS):
Joe Hanna, President and CEO of McGrath, made the following comments:
“We were pleased with our first quarter results. The 9% increase in companywide rental revenues was driven by strong modular and portable storage performance. Modular rental revenues grew 19% and benefited from a full quarter of Vesta Modular contribution in 2024 compared with two months in 2023. Portable storage rental revenues grew 8%.
“Our modular business was a highlight for the quarter, with broad based rental strength across commercial and education customer bases. We maintained our focus on pricing optimization, rental fleet utilization, and value-added services for our customers. Growth initiatives for Mobile Modular Plus, Site Related Services and new modular equipment sales all continued to show progress.
“TRS-RenTelco experienced continued demand challenges, particularly for semiconductor related projects, resulting in 13% lower rental revenues for the quarter, compared to a year ago. During the quarter we reduced new equipment capital spending and made progress with reducing the fleet size to better align with demand conditions.
“I appreciate the strong commitment from the McGrath employee team as we maintain our independent focus on disciplined execution during the pending WillScot Mobile Mini transaction.”
DIVISION HIGHLIGHTS:
All comparisons presented below are for the quarter ended March 31, 2024 to the quarter ended March 31, 2023 unless otherwise indicated.
MOBILE MODULAR
For the first quarter of 2024, the Company’s Mobile Modular division reported Adjusted EBITDA of $43.3 million, an increase of $10.9 million, or 34%, when compared to the same quarter in 2023.
PORTABLE STORAGE
For the first quarter of 2024, the Company’s Portable Storage division reported Adjusted EBITDA of $11.5 million, an increase of $1.5 million, or 15%, when compared to the same quarter in 2023.
TRS-RENTELCO
For the first quarter of 2024, the Company’s TRS-RenTelco division reported Adjusted EBITDA of $18.5 million, a decrease of 10%, when compared to the same quarter in 2023.
ABOUT MCGRATH:
McGrath RentCorp (Nasdaq: MGRC) is a leading business-to-business rental company in North America with a strong record of profitable business growth. Founded in 1979, McGrath’s operations are centered on modular solutions through its Mobile Modular and Mobile Modular Portable Storage businesses. In addition, its TRS-RenTelco business offers electronic test equipment rental solutions. The Company’s rental product offerings and services are part of the circular supply economy, helping customers work more efficiently, and sustainably manage their environmental footprint. With over 40 years of experience, McGrath’s success is driven by a focus on exceptional customer experiences. This focus has underpinned the Company’s long-term financial success and supported over 30 consecutive years of annual dividend increases to shareholders, a rare distinction among publicly listed companies.
McGrath is headquartered in Livermore, California. Additional information about McGrath and its businesses is available at mgrc.com and investors.mgrc.com.
You should read this press release in conjunction with the financial statements and notes thereto included in the Company’s latest Forms 10-K, 10-Q and other SEC filings. You can visit the Company’s web site at www.mgrc.com to access information on McGrath RentCorp, including the latest Forms 10-K, 10-Q and other SEC filings.
CONFERENCE CALL NOTE:
As previously announced in its press release of April 4, 2024, McGrath RentCorp will host a conference call at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) on April 25, 2024 to discuss the first quarter 2024 results. To participate in the teleconference, dial 1-800-245-3047 (in the U.S.), or 1-203-518-9765 (outside the U.S.), or to listen only, access the simultaneous webcast at the investor relations section of the Company’s website at https://investors.mgrc.com/. A replay will be available for 7 days following the call by dialing 1-800-723-5782 (in the U.S.), or 1-402-220-2663 (outside the U.S.). In addition, a live audio webcast and replay of the call may be found in the investor relations section of the Company’s website at https://investors.mgrc.com/events-and-presentations.
MCGRATH RENTCORP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended March 31,
(in thousands, except per share amounts)
2024
2023
Revenues
Rental
$
120,332
$
110,247
Rental related services
29,580
27,132
Rental operations
149,912
137,379
Sales
35,069
23,660
Other
2,846
2,679
Total revenues
187,827
163,718
Costs and Expenses
Direct costs of rental operations:
Depreciation of rental equipment
22,366
21,833
Rental related services
20,786
19,268
Other
29,010
31,135
Total direct costs of rental operations
72,162
72,236
Costs of sales
22,397
14,115
Total costs of revenues
94,559
86,351
Gross profit
93,268
77,367
Expenses:
Selling and administrative expenses
59,818
57,498
Other income, net
(9,281
)
—
Income from operations
42,731
19,869
Interest expense
12,704
7,464
Foreign currency exchange loss (gain)
132
(226
)
Income from continuing operations before provision for income taxes
29,895
12,631
Provision for income taxes from continuing operations
7,047
1,113
Income from continuing operations
22,848
11,518
Discontinued operations:
Income from discontinued operations before provision for income taxes
—
1,709
Provision for income taxes from discontinued operations
—
453
Gain on sale of discontinued operations, net of tax
—
58,883
Income from discontinued operations
—
60,139
Net income
$
22,848
$
71,657
Earnings per share from continuing operations:
Basic
$
0.93
$
0.47
Diluted
$
0.93
$
0.47
Earnings per share from discontinued operations:
Basic
$
—
$
2.46
Diluted
$
—
$
2.45
Earnings per share:
Basic
$
0.93
$
2.93
Diluted
$
0.93
$
2.92
Shares used in per share calculation:
Basic
24,513
24,416
Diluted
24,564
24,542
Cash dividends declared per share
$
0.475
$
0.465
MCGRATH RENTCORP
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
March 31,
December 31,
(in thousands)
2024
2023
Assets
Cash
$
1,912
$
877
Accounts receivable, net of allowance for credit losses of $2,819 at March 31, 2024 and $2,801 at December 31, 2023
211,950
227,368
Rental equipment, at cost:
Relocatable modular buildings
1,345,919
1,291,093
Portable storage containers
240,517
236,123
Electronic test equipment
370,641
377,587
1,957,077
1,904,803
Less: accumulated depreciation
(588,535
)
(575,480
)
Rental equipment, net
1,368,542
1,329,323
Property, plant and equipment, net
189,166
169,114
Inventories
24,548
15,425
Prepaid expenses and other assets
82,066
87,364
Intangible assets, net
62,020
64,588
Goodwill
323,224
323,224
Total assets
$
2,263,428
$
2,217,283
Liabilities and Shareholders' Equity
Liabilities:
Notes payable
$
798,561
$
762,975
Accounts payable
57,162
58,760
Accrued liabilities
95,725
108,763
Deferred income
122,696
111,428
Deferred income taxes, net
246,264
241,555
Total liabilities
1,320,408
1,283,481
Shareholders’ equity:
Common stock, no par value - Authorized 40,000 shares
Issued and outstanding - 24,541 shares as of March 31, 2024 and 24,496 shares as of December 31, 2023
109,249
111,122
Retained earnings
833,820
822,796
Accumulated other comprehensive loss
(49
)
(116
)
Total shareholders’ equity
943,020
933,802
Total liabilities and shareholders’ equity
$
2,263,428
$
2,217,283
MCGRATH RENTCORP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended March 31,
(in thousands)
2024
2023
Cash Flows from Operating Activities:
Net income
$
22,848
$
71,657
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
27,187
27,590
Deferred income taxes
4,709
(45,496
)
Provision for credit losses
253
744
Share-based compensation
2,209
1,493
Gain on sale of property, plant and equipment
(9,281
)
—
Gain on sale of discontinued operations
—
(58,883
)
Gain on sale of used rental equipment
(7,355
)
(3,089
)
Foreign currency exchange loss (gain)
132
(226
)
Amortization of debt issuance costs
2
2
Change in:
Accounts receivable
15,165
16,209
Inventories
(9,123
)
(5,313
)
Prepaid expenses and other assets
5,298
(2,032
)
Accounts payable
9,145
31,559
Accrued liabilities
(13,037
)
(1,722
)
Deferred income
11,268
3,218
Net cash provided by operating activities
59,420
35,711
Cash Flows from Investing Activities:
Proceeds from sale of discontinued operations
—
262,454
Purchases of rental equipment
(78,641
)
(77,731
)
Purchases of property, plant and equipment
(25,277
)
(6,857
)
Cash paid for acquisition of businesses
—
(453,592
)
Proceeds from sales of used rental equipment
13,554
12,197
Proceeds from sales of property, plant and equipment
12,251
—
Net cash used in investing activities
(78,113
)
(263,529
)
Cash Flows from Financing Activities:
Net borrowings under bank lines of credit
35,584
245,033
Taxes paid related to net share settlement of stock awards
(4,082
)
(6,086
)
Payment of dividends
(11,774
)
(11,400
)
Net cash provided by financing activities
19,728
227,547
Effect of foreign currency exchange rate changes on cash
—
4
Net increase (decrease) in cash
1,035
(267
)
Cash balance, beginning of period
877
957
Cash balance, end of period
$
1,912
$
690
Supplemental Disclosure of Cash Flow Information:
Interest paid, during the period
$
14,184
$
7,817
Net income taxes paid, during the period
$
479
$
413
Dividends accrued during the period, not yet paid
$
12,060
$
11,851
Rental equipment acquisitions, not yet paid
$
5,795
$
5,697
MCGRATH RENTCORP
BUSINESS SEGMENT DATA (unaudited)
Three months ended March 31, 2024
(dollar amounts in thousands)
Mobile Modular
Portable Storage
TRS-RenTelco
Enviroplex
Consolidated
Revenues
Rental
$
76,496
$
18,407
$
25,429
$
—
$
120,332
Rental related services
24,133
4,723
724
—
29,580
Rental operations
100,629
23,130
26,153
—
149,912
Sales
25,326
1,212
6,812
1,719
35,069
Other
1,630
418
798
—
2,846
Total revenues
127,585
24,760
33,763
1,719
187,827
Costs and Expenses
Direct costs of rental operations:
Depreciation
9,874
965
11,527
—
22,366
Rental related services
15,780
4,456
550
—
20,786
Other
22,673
1,468
4,869
—
29,010
Total direct costs of rental operations
48,327
6,889
16,946
—
72,162
Costs of sales
17,413
768
2,942
1,274
22,397
Total costs of revenues
65,740
7,657
19,888
1,274
94,559
Gross Profit
Rental
43,949
15,974
9,033
—
68,956
Rental related services
8,353
267
174
—
8,794
Rental operations
52,302
16,241
9,207
—
77,750
Sales
7,913
444
3,870
445
12,672
Other
1,630
418
798
—
2,846
Total gross profit
61,845
17,103
13,875
445
93,268
Selling and administrative expenses
40,087
9,010
8,918
1,803
59,818
Other income, net
(6,220
)
(1,319
)
(1,742
)
—
(9,281
)
Income (loss) from operations
$
27,978
$
9,412
$
6,699
$
(1,358
)
$
42,731
Interest expense
12,704
Foreign currency exchange loss
132
Provision for income taxes
7,047
Net income
$
22,848
Other Information
Adjusted EBITDA 1
$
43,327
$
11,522
$
18,480
$
(1,261
)
$
72,068
Average rental equipment 2
$
1,174,327
$
223,285
$
372,081
Average monthly total yield 3
2.17
%
2.75
%
2.18
%
Average utilization 4
78.7
%
69.8
%
56.5
%
Average monthly rental rate 5
2.76
%
3.94
%
4.03
%
MCGRATH RENTCORP
BUSINESS SEGMENT DATA (unaudited)
Three months ended March 31, 2023
(dollar amounts in thousands)
Mobile Modular
Portable Storage
TRS-RenTelco
Enviroplex
Adler Tanks (Discontinued)
Consolidated
Revenues
Rental
$
64,056
$
17,057
$
29,134
$
—
$
6,520
$
116,767
Rental related services
21,534
4,718
880
—
2,584
29,716
Rental operations
85,590
21,775
30,014
—
9,104
146,483
Sales
16,967
638
5,114
941
269
23,929
Other
1,370
317
992
—
65
2,744
Total revenues
103,927
22,730
36,120
941
9,438
173,156
Costs and Expenses
Direct costs of rental operations:
Depreciation
8,657
787
12,389
—
1,325
23,158
Rental related services
14,226
4,381
661
—
2,020
21,288
Other
24,127
1,783
5,225
—
1,270
32,405
Total direct costs of rental operations
47,009
6,952
18,275
—
4,614
76,850
Costs of sales
10,747
327
2,225
816
159
14,274
Total costs of revenues
57,756
7,279
20,500
816
4,773
91,124
Gross Profit
Rental
31,273
14,486
11,520
—
3,926
61,205
Rental related services
7,308
337
219
—
564
8,428
Rental operations
38,581
14,823
11,739
—
4,490
69,633
Sales
6,220
311
2,889
125
110
9,655
Other
1,370
317
992
—
65
2,744
Total gross profit
46,171
15,451
15,620
125
4,665
82,032
Selling and administrative expenses
38,456
8,058
9,451
1,533
2,582
60,080
Other income, net
—
—
—
—
—
—
Income (loss) from operations
$
7,715
$
7,393
$
6,169
$
(1,408
)
$
2,083
21,952
Interest expense
7,838
Foreign currency exchange gain
(226
)
Provision for income taxes
1,566
Net income
$
12,774
Other Information
Adjusted EBITDA 1
$
32,425
$
10,020
$
20,635
$
(1,330
)
$
3,682
$
65,432
Average rental equipment 2
$
987,526
$
189,348
$
396,835
Average monthly total yield 3
2.16
%
3.01
%
2.40
%
Average utilization 4
79.4
%
80.8
%
59.2
%
Average monthly rental rate 5
2.72
%
3.71
%
4.14
%
Reconciliation of Adjusted EBITDA to the most directly comparable GAAP measures
To supplement the Company’s financial data presented on a basis consistent with accounting principles generally accepted in the United States of America (“GAAP”), the Company presents “Adjusted EBITDA”, which is defined by the Company as net income before interest expense, provision for income taxes, depreciation, amortization, non-cash impairment costs, share-based compensation, transaction costs and gains on property sales. The Company presents Adjusted EBITDA as a financial measure as management believes it provides useful information to investors regarding the Company’s liquidity and financial condition and because management, as well as the Company’s lenders, use this measure in evaluating the performance of the Company.
Management uses Adjusted EBITDA as a supplement to GAAP measures to further evaluate period-to-period operating performance, compliance with financial covenants in the Company’s revolving lines of credit and senior notes and the Company’s ability to meet future capital expenditure and working capital requirements. Management believes the exclusion of non-cash charges and non-recurring transactions, including share-based compensation, transaction costs and gains on property sales is useful in measuring the Company’s cash available for operations and performance of the Company. Because management finds Adjusted EBITDA useful, the Company believes its investors will also find Adjusted EBITDA useful in evaluating the Company’s performance.
Adjusted EBITDA should not be considered in isolation or as a substitute for net income, cash flows, or other consolidated income or cash flow data prepared in accordance with GAAP or as a measure of the Company’s profitability or liquidity. Adjusted EBITDA is not in accordance with or an alternative for GAAP and may be different from non−GAAP measures used by other companies. Unlike EBITDA, which may be used by other companies or investors, Adjusted EBITDA does not include share-based compensation charges, transaction costs and gains on property sales. The Company believes that Adjusted EBITDA is of limited use in that it does not reflect all of the amounts associated with the Company’s results of operations as determined in accordance with GAAP and does not accurately reflect real cash flow. In addition, other companies may not use Adjusted EBITDA or may use other non-GAAP measures, limiting the usefulness of Adjusted EBITDA for purposes of comparison. The Company’s presentation of Adjusted EBITDA should not be construed as an inference that the Company will not incur expenses that are the same as or similar to the adjustments in this presentation. Therefore, Adjusted EBITDA should only be used to evaluate the Company’s results of operations in conjunction with the corresponding GAAP measures. The Company compensates for the limitations of Adjusted EBITDA by relying upon GAAP results to gain a complete picture of the Company’s performance. Because Adjusted EBITDA is a non-GAAP financial measure, as defined by the SEC, the Company includes in the tables below reconciliations of Adjusted EBITDA to the most directly comparable financial measures calculated and presented in accordance with GAAP.
Reconciliation of Income from Continuing Operations to Adjusted EBITDA
(dollar amounts in thousands)
Three Months Ended
March 31,
Twelve Months Ended
March 31,
2024
2023
2024
2023
Income from continuing operations
$
22,848
$
11,518
$
123,182
$
97,169
Provision for income taxes from continuing operations
7,047
1,113
43,544
26,981
Interest expense
12,704
7,464
45,800
17,418
Depreciation and amortization
27,187
26,133
108,972
96,489
EBITDA
69,786
46,228
321,498
238,057
Share-based compensation
2,209
1,375
8,991
6,610
Transaction costs 3
9,354
14,147
11,084
18,200
Other income, net 4
(9,281
)
—
(12,899
)
—
Adjusted EBITDA 1
$
72,068
$
61,750
$
328,674
$
262,867
Adjusted EBITDA margin 2
37
%
38
%
38
%
39
%
Reconciliation of Adjusted EBITDA to Net Cash Provided by Operating Activities
(dollar amounts in thousands)
Three Months Ended
March 31,
Twelve Months Ended
March 31,
2024
2023
2024
2023
Adjusted EBITDA 1
$
72,068
$
65,432
$
328,674
$
297,579
Interest paid
(14,184
)
(7,817
)
(44,970
)
(20,455
)
Income taxes paid, net of refunds received
(479
)
(413
)
(91,631
)
(27,355
)
Gain on sale of used rental equipment
(7,355
)
(3,089
)
(35,908
)
(35,704
)
Foreign currency exchange loss
132
(226
)
48
165
Amortization of debt issuance costs
2
2
8
14
Change in certain assets and liabilities:
Accounts receivable, net
15,418
16,953
(36,678
)
(21,506
)
Prepaid expenses and other assets
5,298
(7,345
)
(16,683
)
(28,042
)
Accounts payable and other liabilities
(22,748
)
(31,004
)
(9,570
)
(7,992
)
Deferred income
11,268
3,218
22,144
21,696
Net cash provided by operating activities
$
59,420
$
35,711
$
115,434
$
178,400
View source version on businesswire.com: https://www.businesswire.com/news/home/20240424358321/en/
Keith E. Pratt EVP & Chief Financial Officer 925-606-9200
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