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McGrath RentCorp Announces Results for Fourth Quarter 2021

Company Announces 5% Dividend Increase

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 EBITDA1 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)

 

 

 

 

 

December 31,

(in thousands)

2021

 

2020

Assets

 

 

 

 

 

 

Cash

$

1,491

 

$

1,238

 

Accounts receivable, net of allowance for doubtful accounts of $2,125 in 2021 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

 

 

 

 

 

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 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

December 31,

 

Twelve Months Ended

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

December 31,

 

Twelve Months Ended

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.

 

Contacts

Keith E. Pratt

EVP & Chief Financial Officer

925-606-9200

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