8-K
MCGRATH RENTCORP (MGRC)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
| Date of Report (Date of earliest event reported): | February 23, 2022 |
|---|
McGRATH RENTCORP
(Exact name of registrant as specified in its Charter)
| California | 000-13292 | 94-2579843 |
|---|---|---|
| (State or other jurisdiction | (Commission File Number) | (I.R.S. Employer Identification No.) |
| of incorporation) |
5700 Las Positas Road, Livermore, CA 94551-7800
(Address of principal executive offices)
(925) 606-9200
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock | MGRC | NASDAQ Global Select Market |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Security Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On February 23, 2022, McGrath RentCorp (the “Company”) announced via press release the Company’s results for its fourth quarter ended December 31, 2021. A copy of the Company’s press release is attached hereto as Exhibit 99.1. This Form 8-K and the attached exhibit are provided under Item 2.02 of Form 8-K and are furnished to, but not filed with, the Securities and Exchange Commission, and shall not be incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No. | Description |
|---|---|
| 99.1 | Press Release of McGrath RentCorp, dated February 23, 2022. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| McGRATH RENTCORP | |||
|---|---|---|---|
| Dated: | February 23, 2022 | By: | /s/ Keith E. Pratt |
| Keith E. Pratt | |||
| Executive Vice President and Chief Financial Officer |
3
mgrc-ex991_6.htm
| Exhibit 99.1 | ||
|---|---|---|
| PRESS RELEASE | 5700 Las Positas Road<br><br><br>Livermore, California 94551<br><br><br>925-606-9200 |  |
FOR RELEASE February 23, 2022
McGrath RentCorp Announces Results for Fourth Quarter 2021
Company Announces 5% Dividend Increase
LIVERMORE, CA – February 23, 2022 – McGrath RentCorp (NASDAQ: MGRC) (the “Company”), a diversified business-to-business rental company, today announced total revenues for the quarter ended December 31, 2021 of $175.9 million, an increase of 18%, compared to the fourth quarter of 2020. The Company reported net income of $28.4 million, or $1.16 per diluted share, for the fourth quarter of 2021, compared to net income of $31.2 million, or $1.27 per diluted share, for the fourth quarter of 2020.
Total revenues for the year ended December 31, 2021 increased to $616.8 million from $572.6 million in 2020, with adjusted EBITDA increasing $5.6 million, or 2%, to $246.6 million. Net income for the year ended December 31, 2021 was $89.7 million, or $3.66 per diluted share, compared to $102.0 million, or $4.16 per diluted share, in 2020.
The Company also announced that the board of directors declared a quarterly cash dividend of $0.455 per share for the quarter ending March 31, 2022, an increase of $0.02, or 5%, over the prior year period. The cash dividend will be payable on April 29, 2022 to all shareholders of record on April 15, 2022. This marks 31 consecutive years the Company has increased its annual dividend.
FOURTH QUARTER 2021 Company HIGHLIGHTS:
| • | Rental revenues increased 20% year-over-year to $106.1 million. |
|---|---|
| • | Total revenues increased 18% year-over-year to $175.9 million. |
| --- | --- |
| • | Adjusted EBITDA^1^ increased 12% year-over-year to $73.0 million. |
| --- | --- |
| • | Dividend rate increased 4% year-over-year to $0.435 per share for the fourth quarter of 2021. On an annualized basis, this dividend represents a 2.4% yield on the February 22, 2022 close price of $72.98 per share. |
| --- | --- |
Joe Hanna, President and CEO of McGrath RentCorp, made the following comments regarding these results and future expectations:
“We were pleased with our fourth quarter results. Improved end market conditions in each of our three rental business segments enabled us to deliver a 20% increase in companywide rental revenues in the fourth quarter, compared to the prior year. Modular rental revenues grew 29%, with approximately three quarters of the growth attributable to our Design Space and Kitchens To Go acquisitions. Rental revenues at TRS-RenTelco and Adler Tanks grew 4% and 19%, respectively. We were also pleased with the high volume of modular new equipment sales during the quarter, as some previously delayed projects were completed by year end.
2021 was a year of strategic growth investments, with particular emphasis on the modular acquisitions. We expanded our geographic coverage, added new customers and welcomed new team members. I am extremely grateful to our team members who worked tirelessly throughout 2021 to serve our customers and integrate our new acquisitions. With the major integration steps now complete we are very focused on revenue and profit growth, as reflected by our 12% adjusted EBITDA growth in the fourth quarter.
We are encouraged by the positive rental demand trends since the start of the year. Year to date new order bookings at Mobile Modular are up significantly from a year ago. We are well positioned to continue growing this business as demand conditions continue to strengthen.
Our strategic priorities for the next few years are centered on our modular business. We see significant opportunities to further expand our geographic coverage and to broaden the value we bring to customers with rental solutions, site related services and new modular equipment sales. As we demonstrated in 2021, we expect to utilize a disciplined combination of organic investments and acquisitions to deploy growth capital and accelerate these priorities. With an experienced leadership team, track record of execution, strong balance sheet and healthy free cash flow generation we are well positioned for long term growth”
Division HIGHLIGHTS:
All comparisons presented below are for the quarter ended December 31, 2021 to the quarter ended December 31, 2020 unless otherwise indicated.
Mobile Modular
The Company’s Mobile Modular division reported income from operations of $26.1 million, an increase of $3.6 million, or 16%, with Adjusted EBITDA increasing $8.4 million, or 28%, to $38.4 million. Rental revenues increased 29% to $61.5 million, depreciation expense increased 32% to $7.6 million and other direct costs increased 38% to $15.1 million, which resulted in an increase in gross profit on rental revenues of 26% to $38.7 million. The rental revenue increase reflects in part the new Design Space and Kitchens To Go customers that contributed approximately three quarters of the increase. Rental related services revenues increased 8% to $17.6 million, primarily attributable to services performed during the lease and increased delivery and return delivery revenues at Portable Storage, with associated gross profit increasing 9% to $5.0 million. Sales revenues increased 68% to $20.2 million, due to increased new and used equipment sales. Gross margin on sales was 33% compared to 27% in 2020, resulting in an increase in gross profit on sales revenues of $3.3 million. Selling and administrative expenses increased $8.2 million, or 50%, primarily due to increased employee salaries and benefit costs totaling $2.7 million, mostly from the addition of Design Space and Kitchens To Go employees, $2.4 million higher allocated corporate expenses and $1.7 million higher amortization of intangible assets associated with the Design Space and Kitchens To Go acquisitions.
TRS-RenTelco
The Company’s TRS-RenTelco division reported income from operations of $9.8 million, a decrease of $1.1 million, or 10%, with Adjusted EBITDA decreasing $0.4 million, or 2%, to $22.3 million. Rental revenues increased 4% to $29.1 million, depreciation expense increased 5% to $11.9 million and other direct costs increased 12% to $4.9 million, which resulted in gross profit on rental revenues comparable to the prior year. Rental revenue increases were primarily from increased demand for general purpose equipment. Sales revenues decreased 13% to $7.6 million while gross margin on sales improved to 51% in 2021 from 47% in 2020, which together resulted in a 7% decrease in gross profit on sales revenues to $3.8 million. Selling and administrative expenses increased 11% to $6.8 million, primarily due to increased marketing and administrative expenses and higher allocated corporate expenses.
Adler Tanks
The Company’s Adler Tanks division reported income from operations of $2.8 million, an increase of 29%, with Adjusted EBITDA increasing $0.8 million, or 12%, to $7.8 million. Rental revenues increased 19% to $15.5 million, as a result of broad based regional and end market demand. Depreciation expense was comparable to the prior year and other direct costs increased 47% to $3.4 million, which resulted in an increased gross profit on rental revenues of 21%, to $8.1 million. Rental related services revenues increased 10% to $5.9 million, with gross profit on rental related services decreasing 13%, to $1.1 million. Selling and administrative expenses increased 16% to $6.7 million primarily due to increased employee salaries and benefit costs and higher allocated corporate expenses.
financial outlook:
For the full-year 2022, the Company expects:
| 2022 Outlook | 2021 Actual | ||
|---|---|---|---|
| • | Total revenue: | $675 million to $705 million | $616.8 million |
| • | Adjusted EBITDA ^1,^^^^2^: | $260 million to $275 million | $246.6 million |
| • | Gross rental equipment capital expenditures: | $117 million to $127 million | $114.1 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 January 20, 2022, McGrath RentCorp will host a conference call at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) on February 23, 2022 to discuss the fourth 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 8842099. 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 the expectation to deploy more rental equipment capital and to expand the breadth of products and services to the Company’s customers, optimism about the overall positive rental demand trends, to further expand geographic coverage through the utilization of organic investments and acquisitions, and that the Company is positioned for long term growth, 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 ongoing 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 December 31, | Twelve Months Ended December 31, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands, except per share amounts) | 2021 | 2020 | 2021 | 2020 | ||||||||
| Revenues | ||||||||||||
| Rental | $ | 106,076 | $ | 88,517 | $ | 390,013 | $ | 351,790 | ||||
| Rental related services | 24,191 | 22,367 | 98,061 | 92,393 | ||||||||
| Rental operations | 130,267 | 110,884 | 488,074 | 444,183 | ||||||||
| Sales | 44,732 | 37,238 | 125,235 | 124,604 | ||||||||
| Other | 912 | 858 | 3,524 | 3,767 | ||||||||
| Total revenues | 175,911 | 148,980 | 616,833 | 572,554 | ||||||||
| Costs and Expenses | ||||||||||||
| Direct costs of rental operations: | ||||||||||||
| Depreciation of rental equipment | 23,671 | 21,226 | 91,887 | 85,866 | ||||||||
| Rental related services | 18,020 | 16,345 | 74,256 | 68,105 | ||||||||
| Other | 23,373 | 17,647 | 91,069 | 73,818 | ||||||||
| Total direct costs of rental operations | 65,064 | 55,218 | 257,212 | 227,789 | ||||||||
| Costs of sales | 28,579 | 23,108 | 78,600 | 81,019 | ||||||||
| Total costs of revenues | 93,643 | 78,326 | 335,812 | 308,808 | ||||||||
| Gross profit | 82,268 | 70,653 | 281,021 | 263,746 | ||||||||
| Selling and administrative expenses | 39,295 | 29,628 | 148,600 | 122,993 | ||||||||
| Income from operations | 42,973 | 41,025 | 132,421 | 140,753 | ||||||||
| Other income (expense): | ||||||||||||
| Interest expense | (3,247 | ) | (1,983 | ) | (10,455 | ) | (8,787 | ) | ||||
| Foreign currency exchange (loss) gain | (25 | ) | 267 | (210 | ) | 78 | ||||||
| Income before provision for income taxes | 39,701 | 39,309 | 121,756 | 132,044 | ||||||||
| Provision for income taxes | 11,254 | 8,133 | 32,051 | 30,060 | ||||||||
| Net income | $ | 28,447 | $ | 31,176 | $ | 89,705 | $ | 101,984 | ||||
| Earnings per share: | ||||||||||||
| Basic | $ | 1.17 | $ | 1.29 | $ | 3.70 | $ | 4.22 | ||||
| Diluted | $ | 1.16 | $ | 1.27 | $ | 3.66 | $ | 4.16 | ||||
| Shares used in per share calculation: | ||||||||||||
| Basic | 24,252 | 24,119 | 24,220 | 24,157 | ||||||||
| Diluted | 24,537 | 24,453 | 24,515 | 24,531 | ||||||||
| Cash dividends declared per share | $ | 0.435 | $ | 0.420 | $ | 1.74 | $ | 1.68 |
MCGRATH RENTCORP
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
| (in thousands) | 2020 | ||||
| Assets | |||||
| Cash | 1,491 | $ | 1,238 | ||
| Accounts receivable, net of allowance for doubtful accounts of 2,125 in 2021<br> and 2,100 in 2020 | 159,499 | 123,316 | |||
| Rental equipment, at cost: | |||||
| Relocatable modular buildings | 1,040,094 | 882,115 | |||
| Electronic test equipment | 361,391 | 333,020 | |||
| Liquid and solid containment tanks and boxes | 309,908 | 315,706 | |||
| 1,711,393 | 1,530,841 | ||||
| Less: accumulated depreciation | (646,169 | ) | (592,725 | ) | |
| Rental equipment, net | 1,065,224 | 938,116 | |||
| Property, plant and equipment, net | 135,325 | 136,210 | |||
| Prepaid expenses and other assets | 54,945 | 41,549 | |||
| Intangible assets, net | 47,049 | 7,118 | |||
| Goodwill | 132,393 | 28,197 | |||
| Total assets | 1,595,926 | $ | 1,275,744 | ||
| Liabilities and Shareholders' Equity | |||||
| Liabilities: | |||||
| Notes payable | 426,451 | $ | 222,754 | ||
| Accounts payable and accrued liabilities | 136,313 | 108,334 | |||
| Deferred income | 58,716 | 45,975 | |||
| Deferred income taxes, net | 242,425 | 216,077 | |||
| Total liabilities | 863,905 | 593,140 | |||
| Commitments and contingencies (Note 9) | |||||
| Shareholders’ equity: | |||||
| Common stock, no par value - Authorized 40,000 shares | |||||
| Issued and outstanding - 24,260 shares as of December 31, 2021 and 24,128 shares as of December 31, 2020 | 108,610 | 106,289 | |||
| Retained earnings | 623,465 | 576,419 | |||
| Accumulated other comprehensive loss | (54 | ) | (104 | ) | |
| Total shareholders’ equity | 732,021 | 682,604 | |||
| Total liabilities and shareholders’ equity | 1,595,926 | $ | 1,275,744 |
All values are in US Dollars.
MCGRATH RENTCORP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| Twelve Months Ended December 31, | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands) | 2021 | 2020 | ||||||||||||
| Cash Flows from Operating Activities: | ||||||||||||||
| Net income | $ | 89,705 | $ | 101,984 | ||||||||||
| Adjustments to reconcile net income to net cash provided by<br><br><br>operating activities: | ||||||||||||||
| Depreciation and amortization | 106,695 | 94,643 | ||||||||||||
| Deferred income taxes | 26,348 | (2,193 | ) | |||||||||||
| Provision for doubtful accounts | 451 | 1,343 | ||||||||||||
| Share-based compensation | 7,666 | 5,549 | ||||||||||||
| Gain on sale of used rental equipment | (25,441 | ) | (19,329 | ) | ||||||||||
| Foreign currency exchange loss (gain) | 210 | (78 | ) | |||||||||||
| Amortization of debt issuance costs | 15 | 11 | ||||||||||||
| Change in: | ||||||||||||||
| Accounts receivable | (24,397 | ) | 3,440 | |||||||||||
| Prepaid expenses and other assets | (6,816 | ) | 3,807 | |||||||||||
| Accounts payable and accrued liabilities | 12,226 | 316 | ||||||||||||
| Deferred income | 9,082 | (8,989 | ) | |||||||||||
| Net cash provided by operating activities | 195,744 | 180,504 | ||||||||||||
| Cash Flows from Investing Activities: | ||||||||||||||
| Purchases of rental equipment | (114,145 | ) | (86,329 | ) | ||||||||||
| Purchases of property, plant and equipment | (2,680 | ) | (13,724 | ) | ||||||||||
| Cash paid for acquisition of businesses | (283,124 | ) | — | |||||||||||
| Cash paid for acquisition of Titan business assets | (6,585 | ) | — | |||||||||||
| Cash paid for acquisition of non-compete agreements | (2,500 | ) | — | |||||||||||
| Proceeds from sales of used rental equipment | 57,337 | 47,052 | ||||||||||||
| Net cash used in investing activities | (351,697 | ) | (53,001 | ) | ||||||||||
| Cash Flows from Financing Activities: | ||||||||||||||
| Net borrowing (repayment) under bank lines of credit | 143,729 | (70,689 | ) | |||||||||||
| Borrowings under note purchase agreement | 100,000 | — | ||||||||||||
| Principal payment of Series B senior notes | (40,000 | ) | — | |||||||||||
| Repurchase of common stock | — | (13,617 | ) | |||||||||||
| Taxes paid related to net share settlement of stock awards | (5,345 | ) | (4,376 | ) | ||||||||||
| Payment of dividends | (42,182 | ) | (39,769 | ) | ||||||||||
| Net cash provided by (used in) financing activities | 156,202 | (128,451 | ) | |||||||||||
| Effect of foreign currency exchange rate changes on cash | 4 | (156 | ) | |||||||||||
| Net increase (decrease) in cash | 253 | (1,104 | ) | |||||||||||
| Cash balance, beginning of period | 1,238 | 2,342 | ||||||||||||
| Cash balance, end of period | $ | 1,491 | $ | 1,238 | ||||||||||
| Supplemental Disclosure of Cash Flow Information: | ||||||||||||||
| Interest paid, during the period | $ | 10,326 | $ | 9,050 | ||||||||||
| Net income taxes paid, during the period | $ | 9,087 | $ | 34,903 | ||||||||||
| Dividends accrued during the period, not yet paid | $ | 11,280 | $ | 10,083 | ||||||||||
| Rental equipment acquisitions, not yet paid | $ | 5,750 | $ | 4,373 | ||||||||||
| 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 December 31, 2021 | ||||||||||||||
| (dollar amounts in thousands) | Mobile Modular | TRS-RenTelco | Adler Tanks | Enviroplex | Consolidated | |||||||||
| Revenues | ||||||||||||||
| Rental | $ | 61,451 | $ | 29,079 | $ | 15,546 | $ | — | $ | 106,076 | ||||
| Rental related services | 17,604 | 731 | 5,856 | — | 24,191 | |||||||||
| Rental operations | 79,055 | 29,810 | 21,402 | — | 130,267 | |||||||||
| Sales | 20,216 | 7,563 | 769 | 16,184 | 44,732 | |||||||||
| Other | 431 | 361 | 120 | — | 912 | |||||||||
| Total revenues | 99,702 | 37,734 | 22,291 | 16,184 | 175,911 | |||||||||
| Costs and Expenses | ||||||||||||||
| Direct costs of rental operations: | ||||||||||||||
| Depreciation | 7,634 | 11,945 | 4,092 | — | 23,671 | |||||||||
| Rental related services | 12,634 | 643 | 4,743 | — | 18,020 | |||||||||
| Other | 15,120 | 4,881 | 3,372 | — | 23,373 | |||||||||
| Total direct costs of rental operations | 35,388 | 17,469 | 12,207 | — | 65,064 | |||||||||
| Costs of sales | 13,631 | 3,738 | 552 | 10,658 | 28,579 | |||||||||
| Total costs of revenues | 49,019 | 21,207 | 12,759 | 10,658 | 93,643 | |||||||||
| Gross Profit | ||||||||||||||
| Rental | 38,697 | 12,253 | 8,082 | — | 59,032 | |||||||||
| Rental related services | 4,970 | 88 | 1,113 | — | 6,171 | |||||||||
| Rental operations | 43,667 | 12,341 | 9,195 | — | 65,203 | |||||||||
| Sales | 6,585 | 3,825 | 217 | 5,526 | 16,153 | |||||||||
| Other | 431 | 361 | 120 | — | 912 | |||||||||
| Total gross profit | 50,683 | 16,527 | 9,532 | 5,526 | 82,268 | |||||||||
| Selling and administrative expenses | 24,627 | 6,770 | 6,689 | 1,209 | 39,295 | |||||||||
| Income from operations | $ | 26,056 | $ | 9,757 | $ | 2,843 | $ | 4,317 | $ | 42,973 | ||||
| Interest expense | (3,247 | ) | ||||||||||||
| Foreign currency exchange loss | (25 | ) | ||||||||||||
| Provision for income taxes | (11,254 | ) | ||||||||||||
| Net income | $ | 28,447 | ||||||||||||
| Other Information | ||||||||||||||
| Adjusted EBITDA ^1^ | $ | 38,412 | $ | 22,345 | $ | 7,817 | $ | 4,386 | $ | 72,960 | ||||
| Average rental equipment ^2^ | $ | 988,067 | $ | 362,760 | $ | 309,841 | ||||||||
| Average monthly total yield ^3^ | 2.07 | % | 2.67 | % | 1.67 | % | ||||||||
| Average utilization ^4^ | 76.9 | % | 65.9 | % | 50.1 | % | ||||||||
| Average monthly rental rate ^5^ | 2.70 | % | 4.05 | % | 3.34 | % |
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.
| 2. | 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. | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 3. | Average monthly total yield is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment for the period. | |||||||||||||
| --- | --- | |||||||||||||
| 4. | 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. | |||||||||||||
| --- | --- | |||||||||||||
| 5. | 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 December 31, 2020 | ||||||||||||||
| (dollar amounts in thousands) | Mobile Modular | TRS-RenTelco | Adler Tanks | Enviroplex | Consolidated | |||||||||
| Revenues | ||||||||||||||
| Rental | $ | 47,548 | $ | 27,916 | $ | 13,054 | $ | — | $ | 88,518 | ||||
| Rental related services | 16,236 | 784 | 5,347 | — | 22,367 | |||||||||
| Rental operations | 63,784 | 28,700 | 18,401 | — | 110,885 | |||||||||
| Sales | 12,016 | 8,675 | 426 | 16,121 | 37,238 | |||||||||
| Other | 351 | 438 | 68 | — | 857 | |||||||||
| Total revenues | 76,151 | 37,813 | 18,895 | 16,121 | 148,980 | |||||||||
| Costs and Expenses | ||||||||||||||
| Direct costs of rental operations: | ||||||||||||||
| Depreciation | 5,790 | 11,343 | 4,093 | — | 21,226 | |||||||||
| Rental related services | 11,688 | 583 | 4,074 | — | 16,345 | |||||||||
| Other | 10,989 | 4,371 | 2,287 | — | 17,647 | |||||||||
| Total direct costs of rental operations | 28,467 | 16,297 | 10,454 | — | 55,218 | |||||||||
| Costs of sales | 8,737 | 4,573 | 478 | 9,320 | 23,108 | |||||||||
| Total costs of revenues | 37,204 | 20,870 | 10,932 | 9,320 | 78,326 | |||||||||
| Gross Profit | ||||||||||||||
| Rental | 30,769 | 12,202 | 6,674 | — | 49,645 | |||||||||
| Rental related services | 4,548 | 201 | 1,273 | — | 6,022 | |||||||||
| Rental operations | 35,317 | 12,403 | 7,947 | — | 55,667 | |||||||||
| Sales | 3,279 | 4,102 | (52 | ) | 6,801 | 14,130 | ||||||||
| Other | 351 | 438 | 68 | — | 857 | |||||||||
| Total gross profit | 38,947 | 16,943 | 7,963 | 6,801 | 70,654 | |||||||||
| Selling and administrative expenses | 16,456 | 6,108 | 5,766 | 1,298 | 29,628 | |||||||||
| Income from operations | $ | 22,491 | $ | 10,835 | $ | 2,197 | $ | 5,503 | 41,026 | |||||
| Interest expense | (1,983 | ) | ||||||||||||
| Foreign currency exchange gain | 267 | |||||||||||||
| Provision for income taxes | (8,134 | ) | ||||||||||||
| Net income | $ | 31,176 | ||||||||||||
| Other Information | ||||||||||||||
| Adjusted EBITDA ^1^ | $ | 30,024 | $ | 22,767 | $ | 6,983 | $ | 5,567 | $ | 65,341 | ||||
| Average rental equipment ^2^ | $ | 834,599 | $ | 333,505 | $ | 314,647 | ||||||||
| Average monthly total yield ^3^ | 1.90 | % | 2.74 | % | 1.38 | % | ||||||||
| Average utilization ^4^ | 76.2 | % | 67.1 | % | 42.6 | % | ||||||||
| Average monthly rental rate ^5^ | 2.49 | % | 4.08 | % | 3.25 | % |
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.
| 2. | 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. | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 3. | Average monthly total yield is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment for the period. | |||||||||||||
| --- | --- | |||||||||||||
| 4. | 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. | |||||||||||||
| --- | --- | |||||||||||||
| 5. | 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) | ||||||||||||||
| Twelve months ended December 31, 2021 | ||||||||||||||
| (dollar amounts in thousands) | Mobile Modular | TRS-RenTelco | Adler Tanks | Enviroplex | Consolidated | |||||||||
| Revenues | ||||||||||||||
| Rental | $ | 220,569 | $ | 113,419 | $ | 56,025 | $ | — | $ | 390,013 | ||||
| Rental related services | 72,330 | 2,880 | 22,851 | — | 98,061 | |||||||||
| Rental operations | 292,899 | 116,299 | 78,876 | — | 488,074 | |||||||||
| Sales | 68,982 | 22,242 | 2,930 | 31,081 | 125,235 | |||||||||
| Other | 1,435 | 1,653 | 436 | — | 3,524 | |||||||||
| Total revenues | 363,316 | 140,194 | 82,242 | 31,081 | 616,833 | |||||||||
| Costs and Expenses | ||||||||||||||
| Direct costs of rental operations: | ||||||||||||||
| Depreciation | 28,071 | 47,374 | 16,442 | — | 91,887 | |||||||||
| Rental related services | 53,018 | 2,704 | 18,534 | — | 74,256 | |||||||||
| Other | 60,429 | 19,148 | 11,492 | — | 91,069 | |||||||||
| Total direct costs of rental operations | 141,518 | 69,226 | 46,468 | — | 257,212 | |||||||||
| Costs of sales | 45,758 | 9,574 | 2,075 | 21,193 | 78,600 | |||||||||
| Total costs of revenues | 187,276 | 78,800 | 48,543 | 21,193 | 335,812 | |||||||||
| Gross Profit | ||||||||||||||
| Rental | 132,070 | 46,897 | 28,091 | — | 207,058 | |||||||||
| Rental related services | 19,310 | 176 | 4,317 | — | 23,803 | |||||||||
| Rental operations | 151,380 | 47,073 | 32,408 | — | 230,861 | |||||||||
| Sales | 23,225 | 12,667 | 855 | 9,888 | 46,635 | |||||||||
| Other | 1,435 | 1,653 | 436 | — | 3,524 | |||||||||
| Total gross profit | 176,040 | 61,394 | 33,699 | 9,888 | 281,021 | |||||||||
| Selling and administrative expenses | 92,603 | 25,152 | 25,542 | 5,303 | 148,600 | |||||||||
| Income from operations | $ | 83,436 | $ | 36,243 | $ | 8,157 | $ | 4,585 | $ | 132,421 | ||||
| Interest expense | (10,455 | ) | ||||||||||||
| Foreign currency exchange loss | (210 | ) | ||||||||||||
| Provision for income taxes | (32,051 | ) | ||||||||||||
| Net income | $ | 89,705 | ||||||||||||
| Other Information | ||||||||||||||
| Adjusted EBITDA ^1^ | $ | 128,044 | $ | 85,723 | $ | 27,961 | $ | 4,844 | $ | 246,572 | ||||
| Average rental equipment ^2^ | $ | 925,951 | $ | 351,895 | $ | 312,150 | ||||||||
| Average monthly total yield ^3^ | 1.99 | % | 2.69 | % | 1.50 | % | ||||||||
| Average utilization ^4^ | 76.2 | % | 67.0 | % | 45.4 | % | ||||||||
| Average monthly rental rate ^5^ | 2.61 | % | 4.01 | % | 3.29 | % |
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.
| 2. | 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. | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 3. | Average monthly total yield is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment for the period. | |||||||||||||
| --- | --- | |||||||||||||
| 4. | 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. | |||||||||||||
| --- | --- | |||||||||||||
| 5. | 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) | ||||||||||||||
| Twelve months ended December 31, 2020 | ||||||||||||||
| (dollar amounts in thousands) | Mobile Modular | TRS-RenTelco | Adler Tanks | Enviroplex | Consolidated | |||||||||
| Revenues | ||||||||||||||
| Rental | $ | 188,719 | $ | 109,083 | $ | 53,988 | $ | — | $ | 351,790 | ||||
| Rental related services | 67,527 | 3,080 | 21,786 | — | 92,393 | |||||||||
| Rental operations | 256,246 | 112,163 | 75,774 | — | 444,183 | |||||||||
| Sales | 63,863 | 26,618 | 1,386 | 32,737 | 124,604 | |||||||||
| Other | 1,415 | 2,030 | 322 | — | 3,767 | |||||||||
| Total revenues | 321,524 | 140,811 | 77,482 | 32,737 | 572,554 | |||||||||
| Costs and Expenses | ||||||||||||||
| Direct costs of rental operations: | ||||||||||||||
| Depreciation | 22,967 | 46,472 | 16,427 | — | 85,866 | |||||||||
| Rental related services | 48,910 | 2,419 | 16,776 | — | 68,105 | |||||||||
| Other | 47,762 | 17,133 | 8,923 | — | 73,818 | |||||||||
| Total direct costs of rental operations | 119,639 | 66,024 | 42,126 | — | 227,789 | |||||||||
| Costs of sales | 46,011 | 13,923 | 1,277 | 19,808 | 81,019 | |||||||||
| Total costs of revenues | 165,650 | 79,947 | 43,403 | 19,808 | 308,808 | |||||||||
| Gross Profit | ||||||||||||||
| Rental | 117,990 | 45,478 | 28,638 | — | 192,106 | |||||||||
| Rental related services | 18,617 | 661 | 5,010 | — | 24,288 | |||||||||
| Rental operations | 136,607 | 46,139 | 33,648 | — | 216,394 | |||||||||
| Sales | 17,852 | 12,695 | 109 | 12,929 | 43,585 | |||||||||
| Other | 1,415 | 2,030 | 322 | — | 3,767 | |||||||||
| Total gross profit | 155,874 | 60,864 | 34,079 | 12,929 | 263,746 | |||||||||
| Selling and administrative expenses | 68,470 | 24,306 | 24,764 | 5,453 | 122,993 | |||||||||
| Income from operations | $ | 87,404 | $ | 36,558 | $ | 9,315 | $ | 7,476 | $ | 140,753 | ||||
| Interest expense | (8,787 | ) | ||||||||||||
| Foreign currency exchange gain | 78 | |||||||||||||
| Provision for income taxes | (30,060 | ) | ||||||||||||
| Net income | $ | 101,984 | ||||||||||||
| Other Information | ||||||||||||||
| Adjusted EBITDA ^1^ | $ | 119,202 | $ | 85,082 | $ | 29,010 | $ | 7,729 | $ | 241,023 | ||||
| Average rental equipment ^2^ | $ | 825,614 | $ | 336,399 | $ | 314,797 | ||||||||
| Average monthly total yield ^3^ | 1.88 | % | 2.70 | % | 1.43 | % | ||||||||
| Average utilization ^4^ | 77.2 | % | 66.2 | % | 44.6 | % | ||||||||
| Average monthly rental rate ^5^ | 2.47 | % | 4.08 | % | 3.21 | % |
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.
| 2. | 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. |
|---|---|
| 3. | Average monthly total yield is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment for the period. |
| --- | --- |
| 4. | 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. |
| --- | --- |
| 5. | 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<br><br><br>December 31, | Twelve Months Ended<br><br><br>December 31, | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | |||||||||
| Net income | $ | 28,447 | $ | 31,175 | $ | 89,705 | $ | 101,984 | ||||
| Provision for income taxes | 11,254 | 8,134 | 32,051 | 30,060 | ||||||||
| Interest expense | 3,247 | 1,983 | 10,455 | 8,787 | ||||||||
| Depreciation and amortization | 27,648 | 23,394 | 106,695 | 94,643 | ||||||||
| EBITDA | 70,596 | 64,686 | 238,906 | 235,474 | ||||||||
| Share-based compensation | 2,364 | 655 | 7,666 | 5,549 | ||||||||
| Adjusted EBITDA ^1^ | $ | 72,960 | $ | 65,341 | $ | 246,572 | $ | 241,023 | ||||
| Adjusted EBITDA margin ^2^ | 41 | % | 44 | % | 40 | % | 42 | % |
Reconciliation of Adjusted EBITDA to Net Cash Provided by Operating Activities
| (dollar amounts in thousands) | Three Months Ended<br><br><br>December 31, | Twelve Months Ended<br><br><br>December 31, | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | |||||||||
| Adjusted EBITDA ^1^ | $ | 72,960 | $ | 65,341 | $ | 246,572 | $ | 241,023 | ||||
| Interest paid | (3,849 | ) | (2,221 | ) | (10,326 | ) | (9,050 | ) | ||||
| Income taxes paid, net of refunds received | (1,013 | ) | (10,199 | ) | (9,087 | ) | (34,903 | ) | ||||
| Gain on sale of used rental equipment | (7,653 | ) | (5,219 | ) | (25,441 | ) | (19,329 | ) | ||||
| Foreign currency exchange loss (gain) | 25 | (267 | ) | 210 | (78 | ) | ||||||
| Amortization of debt issuance costs | 4 | 3 | 15 | 11 | ||||||||
| Change in certain assets and liabilities: | ||||||||||||
| Accounts receivable, net | 9,332 | 6,117 | (23,946 | ) | 4,783 | |||||||
| Prepaid expenses and other assets | 4,593 | 5,121 | (6,816 | ) | 3,807 | |||||||
| Accounts payable and other liabilities | (3,896 | ) | 2,871 | 15,481 | 3,229 | |||||||
| Deferred income | (11,046 | ) | (12,580 | ) | 9,082 | (8,989 | ) | |||||
| Net cash provided by operating activities | $ | 59,457 | $ | 48,967 | $ | 195,744 | $ | 180,504 | ||||
| 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. | |||||||||||
| --- | --- | |||||||||||
| 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 |