McGrath RentCorp Announces Results for Fourth Quarter 2013
Rental Revenues Increase 2%
EPS Decreases 4% to
Company Announces 2% Dividend Increase
Total revenues for the year ended
The Company also announced that the board of directors declared a quarterly cash dividend of
Dennis Kakures, President and CEO of
"Although we are disappointed that Company-wide net income was relatively flat and EPS down 4% from last year's fourth quarter, we continue to be pleased with the underlying business activity levels and rental revenue growth outlook in our rental business portfolio.
Modular division-wide rental revenues for the quarter increased
Modular division income from operations for the quarter increased by
Rental revenues at Adler Tank Rentals (ATR), our liquid and solid containment tank and box division, decreased by
Rental revenues for TRS-RenTelco, our electronics division, declined for the quarter by
Mobile Modular Portable Storage continued to make good progress during the quarter in building its customer following, increasing booking levels and growing rental revenues, from a year ago. Rental revenues for the fourth quarter of 2013 grew by 35% from a year ago, as well as 17% sequentially over the third quarter of 2013. Income from operations also continues to grow favorably as we increase our top line rental revenues and critical mass by market. We believe that our portable storage business can become a meaningful contributor to
Although our EPS results for 2013 were
Our 2014 full year earnings guidance range of
All comparisons presented below are for the quarter ended
Mobile Modular
For the fourth quarter of 2013, the Company's Mobile Modular division reported a 4% increase in income from operations to
TRS-RenTelco
For the fourth quarter of 2013, the Company's TRS-RenTelco division reported a 6% increase in income from operations to
For the fourth quarter of 2013, the Company's
OTHER HIGHLIGHTS
-
Debt increased
$9.1 million during the quarter to$290.0 million , with the Company's funded debt (notes payable) to equity ratio increasing from 0.71 to 1 atSeptember 30, 2013 to 0.72 to 1 atDecember 31 , 2013. As ofDecember 31, 2013 , the Company had capacity to borrow an additional$240.0 million under its lines of credit. -
Dividend rate increased 2% to
$0.24 per share for the fourth quarter 2013 compared to the fourth quarter 2012. On an annualized basis, this dividend represents a 2.7% yield on theFebruary 26, 2014 close price of$35.95 . -
Adjusted EBITDA increased 2% to
$41.6 million for the fourth quarter of 2013. AtDecember 31, 2013 , the Company's ratio of funded debt to the last twelve months actual Adjusted EBITDA was 1.81 to 1 compared to 1.76 to 1 atSeptember 30 , 2013. Adjusted EBITDA is defined as net income before interest expense, provision for income taxes, depreciation, amortization and non-cash share-based compensation. A reconciliation of net income to Adjusted EBITDA and Adjusted EBITDA to net cash provided by operating activities can be found at the end of this release.
You should read this press release in conjunction with the financial statements and notes thereto included in the Company's latest Forms 10-K and 10-Q and other
FINANCIAL GUIDANCE
The Company expects 2014 full-year earnings per share to be in a range of
For the full-year 2014, the Company expects 5% to 10% growth in rental operations revenues over 2013. Sales revenue is expected to be approximately 10% lower than 2013, and gross profit from sales is expected to be approximately 5% lower than 2013. Rental equipment depreciation expense is expected to increase to between
About
Founded in 1979,
Corporate – www.mgrc.com
Tanks and Boxes – www.AdlerTankRentals.com
Modular Buildings – www.MobileModularRents.com
Portable Storage – www.MobileModularRents-PortableStorage.com
Electronic Test Equipment – www.TRS-RenTelco.com
School Facilities Manufacturing – www.Enviroplex.com
Conference Call Note
As previously announced in its press release of
FORWARD-LOOKING STATEMENTS
Statements in this press release which are not historical facts are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, regarding
Management cautions that forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that could cause our actual results to differ materially from those projected in such forward-looking statements including, without limitation, the following: continuance and strength of our modular building division recovery; extent of general purpose test equipment rental softness; extent of the increase in utilization levels of our liquid and sold containment tank and box rental assets, the effects of a recession and financial, budget and credit crises, particularly in
Our future business, financial condition and results of operations could differ materially from those anticipated by such forward-looking statements and are subject to risks and uncertainties including the risks set forth above, those discussed in Part II—Item 1A "Risk Factors" and elsewhere in our Form 10-K for the year ended
MCGRATH RENTCORP | ||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||
(UNAUDITED) | ||||
Three Months Ended December 31, |
Twelve Months Ended December 31, |
|||
(in thousands, except per share amounts) | 2013 | 2012 | 2013 | 2012 |
REVENUES | ||||
Rental | $66,181 | $65,117 | $255,766 | $248,444 |
Rental Related Services | 13,784 | 12,217 | 53,148 | 46,920 |
Rental Operations | 79,965 | 77,334 | 308,914 | 295,364 |
Sales | 14,257 | 24,126 | 68,443 | 66,444 |
Other | 392 | 490 | 1,963 | 2,266 |
Total Revenues | 94,614 | 101,950 | 379,320 | 364,074 |
COSTS AND EXPENSES | ||||
Direct Costs of Rental Operations | ||||
Depreciation of Rental Equipment | 17,747 | 16,583 | 68,208 | 63,819 |
Rental Related Services | 10,598 | 9,391 | 40,189 | 37,207 |
Other | 12,815 | 11,725 | 55,017 | 45,581 |
Total Direct Costs of Rental Operations | 41,160 | 37,699 | 163,414 | 146,607 |
Costs of Sales | 8,982 | 20,212 | 47,080 | 49,173 |
Total Costs of Revenues | 50,142 | 57,911 | 210,494 | 195,780 |
Gross Profit | 44,472 | 44,039 | 168,826 | 168,294 |
Selling and Administrative Expenses | 22,952 | 22,906 | 88,765 | 86,278 |
Income from Operations | 21,520 | 21,133 | 80,061 | 82,016 |
Interest Expense | 2,179 | 2,282 | 8,687 | 9,149 |
Income Before Provision for Income Taxes | 19,341 | 18,851 | 71,374 | 72,867 |
Provision for Income Taxes | 7,580 | 6,915 | 27,977 | 28,090 |
Net Income | $11,761 | $11,936 | $ 43,397 | $ 44,777 |
Earnings Per Share: | ||||
Basic | $ 0.46 | $ 0.48 | $ 1.71 | $ 1.80 |
Diluted | $ 0.45 | $ 0.47 | $ 1.67 | $ 1.78 |
Shares Used in Per Share Calculation: | ||||
Basic | 25,717 | 24,847 | 25,433 | 24,759 |
Diluted | 26,211 | 25,216 | 25,926 | 25,156 |
Cash Dividends Declared Per Share | $ 0.240 | $ 0.235 | $ 0.960 | $ 0.940 |
MCGRATH RENTCORP | ||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
(UNAUDITED) | ||
December 31, | December 31, | |
(in thousands) | 2013 | 2012 |
Assets | ||
Cash | $ 1,630 | $ 1,612 |
Accounts Receivable, net of allowance for doubtful accounts of $2,007 in 2013 and $3,000 in 2012 | 87,650 | 92,256 |
Rental Equipment, at cost: | ||
Relocatable Modular Buildings | 592,391 | 551,101 |
Electronic Test Equipment | 267,772 | 266,934 |
Liquid and Solid Containment Tanks and Boxes | 284,005 | 254,810 |
1,144,168 | 1,072,845 | |
Less Accumulated Depreciation | (377,158) | (353,992) |
Rental Equipment, net | 767,010 | 718,853 |
Property, Plant and Equipment, net | 105,187 | 101,031 |
Prepaid Expenses and Other Assets | 19,718 | 19,507 |
Intangible Assets, net | 10,662 | 11,487 |
Goodwill | 27,700 | 27,700 |
Total Assets | $1,019,557 | $ 972,446 |
Liabilities and Shareholders' Equity | ||
Liabilities: | ||
Notes Payable | $ 290,003 | $ 302,000 |
Accounts Payable and Accrued Liabilities | 63,318 | 52,220 |
Deferred Income | 24,003 | 26,924 |
Deferred Income Taxes, net | 241,023 | 226,564 |
Total Liabilities | 618,527 | 607,708 |
Shareholders' Equity: | ||
Common Stock, no par value - | ||
Authorized - 40,000 shares Issued and Outstanding – | ||
25,757 shares as of December 31, 2013 and 24,931 shares as of December 31, 2012 | 103,023 | 85,342 |
Retained Earnings | 298,038 | 279,396 |
Accumulated Other Comprehensive Loss | (31) | — |
Total Shareholders' Equity | 401,030 | 364,738 |
Total Liabilities and Shareholders' Equity | $1,019,557 | $ 972,446 |
MCGRATH RENTCORP | ||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
(UNAUDITED) | ||
Year Ended December 31, | ||
(in thousands) | 2013 | 2012 |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net Income | $ 43,397 | $ 44,777 |
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: | ||
Depreciation and Amortization | 76,849 | 72,476 |
Provision for Doubtful Accounts | 2,144 | 4,263 |
Non-Cash Share-Based Compensation | 3,680 | 3,840 |
Gain on Sale of Used Rental Equipment | (13,091) | (12,389) |
Change In: | ||
Accounts Receivable | 2,462 | (3,848) |
Prepaid Expenses and Other Assets | (211) | (2,337) |
Accounts Payable and Accrued Liabilities | 6,695 | (3,456) |
Deferred Income | (2,921) | 1,857 |
Deferred Income Taxes | 14,639 | 21,198 |
Net Cash Provided by Operating Activities | 133,643 | 126,381 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchases of Rental Equipment | (132,611) | (131,805) |
Purchases of Property, Plant and Equipment | (11,973) | (14,161) |
Proceeds from Sale of Used Rental Equipment | 33,380 | 30,970 |
Net Cash Used in Investing Activities | (111,204) | (114,996) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Net Borrowings (Repayments) Under Bank Lines of Credit | (11,997) | 5,500 |
Proceeds from the Exercise of Stock Options | 15,067 | 5,841 |
Excess Tax Benefit from Exercise and Disqualifying Disposition of Stock Options | 1,329 | 1,033 |
Payment of Dividends | (24,423) | (23,126) |
Taxes Paid Related to Net Share Settlement of Stock Awards | (2,395) | (250) |
Net Cash Used in Financing Activities | (22,419) | (11,002) |
Effect of Exchange Rate Changes on Cash |
(2) | — |
Net Increase in Cash | 18 | 383 |
Cash Balance, beginning of period | 1,612 | 1,229 |
Cash Balance, end of period | $ 1,630 | $ 1,612 |
Interest Paid, during the period | $ 8,813 | $ 9,107 |
Net Income Taxes Paid, during the period | $ 11,074 | $ 5,842 |
Dividends Accrued During the period, not yet paid | $ 6,373 | $ 6,194 |
Rental Equipment Acquisitions, not yet paid | $ 8,533 | $ 4,491 |
MCGRATH RENTCORP | |||||
BUSINESS SEGMENT DATA (unaudited) | |||||
Three Months Ended December 31, 2013 | |||||
(dollar amounts in thousands) |
Mobile Modular |
TRS- RenTelco |
Adler Tanks |
Enviroplex |
Consolidated |
Revenues | |||||
Rental | $ 22,136 | $ 26,204 | $ 17,841 | $ — | $ 66,181 |
Rental Related Services | 7,882 | 810 | 5,092 | — | 13,784 |
Rental Operations | 30,018 | 27,014 | 22,933 | — | 79,965 |
Sales | 4,348 | 7,907 | 73 | 1,929 | 14,257 |
Other | 113 | 245 | 34 | — | 392 |
Total Revenues | 34,479 | 35,166 | 23,040 | 1,929 | 94,614 |
Costs and Expenses | |||||
Direct Costs of Rental Operations: | |||||
Depreciation of Rental Equipment | 3,719 | 10,415 | 3,613 | — | 17,747 |
Rental Related Services | 5,594 | 601 | 4,403 | — | 10,598 |
Other | 6,892 | 2,891 | 3,032 | — | 12,815 |
Total Direct Costs of Rental Operations | 16,205 | 13,907 | 11,048 | — | 41,160 |
Costs of Sales | 2,732 | 4,153 | 358 | 1,739 | 8,982 |
Total Costs of Revenue | 18,937 | 18,060 | 11,406 | 1,739 | 50,142 |
Gross Profit (Loss) | |||||
Rental | 11,525 | 12,898 | 11,196 | — | 35,619 |
Rental Related Services | 2,288 | 209 | 689 | — | 3,186 |
Rental Operations | 13,813 | 13,107 | 11,885 | — | 38,805 |
Sales | 1,616 | 3,754 | (285) | 190 | 5,275 |
Other | 113 | 245 | 34 | — | 392 |
Total Gross Profit | 15,542 | 17,106 | 11,634 | 190 | 44,472 |
Selling and Administrative Expenses | 9,679 | 6,419 | 6,169 | 685 | 22,952 |
Income (Loss) from Operations | $ 5,863 | $ 10,687 | $ 5,465 | $ (495) | 21,520 |
Interest Expense | 2,179 | ||||
Provision for Income taxes | 7,580 | ||||
Net Income | $ 11,761 | ||||
Other Information | |||||
Average Rental Equipment 1 | $ 560,368 | $ 268,851 | $ 275,887 | ||
Average Monthly Total Yield 2 | 1.32% | 3.25% | 2.16% | ||
Average Utilization 3 | 70.5% | 61.2% | 60.8% | ||
Average Monthly Rental Rate 4 | 1.86% | 5.31% | 3.55% | ||
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 cost of Average Rental Equipment on rent by the total cost of Average 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, 2012 | |||||
(dollar amounts in thousands) |
Mobile Modular |
TRS- RenTelco |
Adler Tanks |
Enviroplex |
Consolidated |
Revenues | |||||
Rental | $ 20,104 | $ 26,849 | $ 18,164 | $ — | $ 65,117 |
Rental Related Services | 6,348 | 842 | 5,027 | — | 12,217 |
Rental Operations | 26,452 | 27,691 | 23,191 | — | 77,334 |
Sales | 4,077 | 10,100 | 32 | 9,917 | 24,126 |
Other | 103 | 354 | 33 | — | 490 |
Total Revenues | 30,632 | 38,145 | 23,256 | 9,917 | 101,950 |
Costs and Expenses | |||||
Direct Costs of Rental Operations: | |||||
Depreciation of Rental Equipment | 3,505 | 9,894 | 3,184 | — | 16,583 |
Rental Related Services | 4,246 | 758 | 4,387 | — | 9,391 |
Other | 5,409 | 3,274 | 3,042 | — | 11,725 |
Total Direct Costs of Rental Operations | 13,160 | 13,926 | 10,613 | — | 37,699 |
Costs of Sales | 3,109 | 7,338 | 38 | 9,727 | 20,212 |
Total Costs of Revenues | 16,269 | 21,264 | 10,651 | 9,727 | 57,911 |
Gross Profit (Loss) | |||||
Rental | 11,190 | 13,681 | 11,938 | — | 36,809 |
Rental Related Services | 2,102 | 84 | 640 | — | 2,826 |
Rental Operations | 13,292 | 13,765 | 12,578 | — | 39,635 |
Sales | 968 | 2,762 | (6) | 190 | 3,914 |
Other | 103 | 354 | 33 | — | 490 |
Total Gross Profit | 14,363 | 16,881 | 12,605 | 190 | 44,039 |
Selling and Administrative Expenses | 8,715 | 6,753 | 6,754 | 684 | 22,906 |
Income (Loss) from Operations | $ 5,648 | $ 10,128 | $ 5,851 | $ (494) | 21,133 |
Interest Expense | 2,282 | ||||
Provision for Income taxes | 6,915 | ||||
Net Income | $ 11,936 | ||||
Other Information | |||||
Average Rental Equipment 1 | $ 532,282 | $ 270,505 | $ 244,160 | ||
Average Monthly Total Yield 2 | 1.26% | 3.31% | 2.48% | ||
Average Utilization 3 | 66.8% | 65.4% | 69.9% | ||
Average Monthly Rental Rate 4 | 1.88% | 5.06% | 3.54% | ||
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 cost of Average Rental Equipment on rent by the total cost of Average 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) | |||||
Twelve Months Ended December 31, 2013 | |||||
(dollar amounts in thousands) |
Mobile Modular |
TRS- RenTelco |
Adler Tanks |
Enviroplex |
Consolidated |
Revenues | |||||
Rental | $ 82,503 | $ 102,101 | $ 71,162 | $ — | $ 255,766 |
Rental Related Services | 28,891 | 3,095 | 21,162 | — | 53,148 |
Rental Operations | 111,394 | 105,196 | 92,324 | — | 308,914 |
Sales | 20,831 | 28,277 | 1,480 | 17,855 | 68,443 |
Other | 436 | 1,391 | 136 | — | 1,963 |
Total Revenues | 132,661 | 134,864 | 93,940 | 17,855 | 379,320 |
Costs and Expenses | |||||
Direct Costs of Rental Operations: | |||||
Depreciation of Rental Equipment | 14,459 | 39,953 | 13,796 | — | 68,208 |
Rental Related Services | 20,980 | 2,681 | 16,528 | — | 40,189 |
Other | 31,167 | 12,963 | 10,887 | — | 55,017 |
Total Direct Costs of Rental Operations | 66,606 | 55,597 | 41,211 | — | 163,414 |
Costs of Sales | 15,632 | 15,936 | 1,653 | 13,859 | 47,080 |
Total Costs of Revenue | 82,238 | 71,533 | 42,864 | 13,859 | 210,494 |
Gross Profit (Loss) | |||||
Rental | 36,877 | 49,185 | 46,479 | — | 132,541 |
Rental Related Services | 7,911 | 414 | 4,634 | — | 12,959 |
Rental Operations | 44,788 | 49,599 | 51,113 | — | 145,500 |
Sales | 5,199 | 12,341 | (173) | 3,996 | 21,363 |
Other | 436 | 1,391 | 136 | — | 1,963 |
Total Gross Profit | 50,423 | 63,331 | 51,076 | 3,996 | 168,826 |
Selling and Administrative Expenses | 36,488 | 24,542 | 24,644 | 3,091 | 88,765 |
Income from Operations | $ 13,935 | $ 38,789 | $ 26,432 | $ 905 | 80,061 |
Interest Expense | 8,687 | ||||
Provision for Income taxes | 27,977 | ||||
Net Income | $ 43,397 | ||||
Other Information | |||||
Average Rental Equipment 1 | $ 546,540 | $ 266,444 | $264,189 | ||
Average Monthly Total Yield 2 | 1.26% | 3.19% | 2.24% | ||
Average Utilization 3 | 68.3% | 62.7% | 64.2% | ||
Average Monthly Rental Rate 4 | 1.84% | 5.09% | 3.50% | ||
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 cost of Average Rental Equipment on rent by the total cost of Average 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) | |||||
Twelve Months Ended December 31, 2012 | |||||
(dollar amounts in thousands) |
Mobile Modular |
TRS- RenTelco |
Adler Tanks |
Enviroplex |
Consolidated |
Revenues | |||||
Rental | $ 79,518 | $ 101,645 | $ 67,281 | $ — | $ 248,444 |
Rental Related Services | 25,775 | 3,673 | 17,472 | — | 46,920 |
Rental Operations | 105,293 | 105,318 | 84,753 | — | 295,364 |
Sales | 14,026 | 26,192 | 2,403 | 23,823 | 66,444 |
Other | 448 | 1,663 | 155 | — | 2,266 |
Total Revenues | 119,767 | 133,173 | 87,311 | 23,823 | 364,074 |
Costs and Expenses | |||||
Direct Costs of Rental Operations: | |||||
Depreciation of Rental Equipment | 13,942 | 38,174 | 11,703 | — | 63,819 |
Rental Related Services | 19,492 | 3,456 | 14,259 | — | 37,207 |
Other | 23,735 | 13,811 | 8,035 | — | 45,581 |
Total Direct Costs of Rental Operations | 57,169 | 55,441 | 33,997 | — | 146,607 |
Costs of Sales | 10,576 | 15,649 | 2,157 | 20,791 | 49,173 |
Total Costs of Revenue | 67,745 | 71,090 | 36,154 | 20,791 | 195,780 |
Gross Profit | |||||
Rental | 41,841 | 49,660 | 47,543 | — | 139,044 |
Rental Related Services | 6,283 | 217 | 3,213 | — | 9,713 |
Rental Operations | 48,124 | 49,877 | 50,756 | — | 148,757 |
Sales | 3,450 | 10,543 | 246 | 3,032 | 17,271 |
Other | 448 | 1,663 | 155 | — | 2,266 |
Total Gross Profit | 52,022 | 62,083 | 51,157 | 3,032 | 168,294 |
Selling and Administrative Expenses | 34,032 | 26,068 | 22,101 | 4,077 | 86,278 |
Income (Loss) from Operations | $ 17,990 | $ 36,015 | $ 29,056 | $ (1,045) | 82,016 |
Interest Expense | 9,149 | ||||
Provision for Income taxes | 28,090 | ||||
Net Income | $ 44,777 | ||||
Other Information | |||||
Average Rental Equipment 1 | $ 524,084 | $ 266,912 | $223,673 | ||
Average Monthly Total Yield 2 | 1.26% | 3.18% | 2.51% | ||
Average Utilization 3 | 66.4% | 65.8% | 71.5% | ||
Average Monthly Rental Rate 4 | 1.90% | 4.83% | 3.50% | ||
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 cost of Average Rental Equipment on rent by the total cost of Average Rental Equipment. | |||||
4 Average Monthly Rental Rate is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment on rent for the period. |
Reconciliation of Adjusted EBITDA to the most directly comparable GAAP measures
To supplement the Company's financial data presented on a basis consistent with accounting principles generally accepted in
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
Reconciliation of Net Income to Adjusted EBITDA
(dollar amounts in thousands) |
Three Months Ended December 31, |
Twelve Months Ended December 31, |
||
2013 | 2012 | 2013 | 2012 | |
Net Income | $ 11,761 | $ 11,936 | $ 43,397 | $ 44,777 |
Provision for Income Taxes | 7,580 | 6,915 | 27,977 | 28,090 |
Interest | 2,179 | 2,282 | 8,687 | 9,149 |
Income from Operations | 21,520 | 21,133 | 80,061 | 82,016 |
Depreciation and Amortization | 19,752 | 18,811 | 76,849 | 72,476 |
Non-Cash Stock-Based Compensation | 298 | 686 | 3,680 | 3,840 |
Adjusted EBITDA 1 | $ 41,570 | $ 40,630 | $160,590 | $158,332 |
Adjusted EBITDA Margin 2 | 44% | 40% | 42% | 43% |
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, |
||
2013 | 2012 | 2013 | 2012 | |
Adjusted EBITDA 1 | $ 41,570 | $ 40,630 | $160,590 | $ 158,332 |
Interest Paid | (3,206) | (3,253) | (8,813) | (9,107) |
Net Income Taxes Paid | (3,144) | (1,209) | (11,074) | (5,842) |
Gain on Sale of Rental Equipment | (3,163) | (3,008) | (13,091) | (12,389) |
Change in certain assets and liabilities: | ||||
Accounts Receivable, net | 5,169 | 7,962 | 4,606 | (415) |
Prepaid Expenses and Other Assets | 892 | 8,392 | (211) | (2,337) |
Accounts Payable and Other Liabilities | (1,252) | (5,422) | 4,557 | (3,718) |
Deferred Income | (3,140) | (8,718) | (2,921) | 1,857 |
Net Cash Provided by Operating Activities | $ 33,726 | $ 35,374 | $133,643 | $ 126,381 |
1 Adjusted EBITDA is defined as net income before interest expense, provision for income taxes, depreciation, amortization, and non-cash share-based compensation. |
2 Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by total revenues for the period. |
CONTACT:Keith E. Pratt Chief Financial Officer 925 606 9200