EPS Decreases 29% to $0.30 for the QuarterRental Revenues Decrease 8%

LIVERMORE, Calif.--(BUSINESS WIRE)--Aug. 6, 2009-- McGrath RentCorp (NASDAQ: MGRC), a diversified business to business rental company, today announced revenues for the quarter ended June 30, 2009, of $66.5 million, a decrease of 10%, compared to $74.0 million in the second quarter of 2008. The Company reported net income of $7.0 million, or $0.30 per diluted share for the second quarter of 2009, compared to net income of $10.1 million, or $0.42 per diluted share, in the second quarter of 2008.

Dennis Kakures, President and CEO of McGrath RentCorp, made the following comments regarding these results and future expectations:

“The continuing challenges of adverse macroeconomic conditions, an unsettled fiscal landscape in California and very competitive market environments, caused a reduction in operating income in each of our established business segments, partly offset by the addition of Adler Tank Rentals. The impact of these difficult market conditions continues to be reflected in lower rental rates and utilization levels, in particular for our modulars and electronic test equipment businesses.

Mobile Modular’s rental revenues decreased by 7% compared to the second quarter of 2008, however, income from operations increased by 3% for the same year over year period. The increase in income from operations was due to reduced material and labor costs in our inventory centers from lower business activity levels and extensive cost reduction efforts, and a large sale of equipment off rent during the quarter. The significant inventory center cost reductions allowed gross margin on rents to increase to 65% compared to 61% a year ago. Our modular rental business continued to be challenged by the California budget situation and its impact on school modernization project starts, and the reduced business activity levels in residential and non-residential construction.

TRS-RenTelco’s rental revenues and income from operations decreased 24% and 77%, respectively, compared to the second quarter of 2008. Equipment returns were significantly lower during the quarter as compared to the second half of 2008 and the first quarter of 2009. However, rental bookings were well below last year’s second quarter, but were modestly higher than the first quarter of 2009. We are hopeful that we may have seen a bottoming in our monthly rental billing rate with flat ending month levels in May and June. We continued to make progress during the quarter in selling lower utilized equipment and reducing depreciation expense to support future profitability. Depreciation expense for the second quarter of 2009 was approximately 11% lower than for our peak fourth quarter 2008 level.

Adler Tanks’ rental revenues and income from operations decreased 7% and 59%, respectively, during the second quarter, compared to the first quarter of 2009. Adler faced lower business activity levels and a very competitive market environment during the quarter. The markedly larger reduction in income from operations compared to rental revenues during the quarter is chiefly related to planned expenditures associated with expanding Adler Tank Rentals into the Northern and Southern California and Pittsburgh markets, and rental equipment purchases to support all branch locations. Although the difficult macroeconomic environment and some seasonality factors negatively impacted Adler’s top line during the second quarter of 2009, business activity levels picked up materially during the later part of the quarter and into the third quarter. We believe this increase in market demand and our investment in entering new geographies will be reflected in a stronger financial performance for our tank rental business in the second half of 2009.

Our goals for the balance of 2009 are to continue building our new rental initiatives while managing costs tightly, and paying down debt. In fact, we’ve reduced debt levels from $305 million at the end of 2008, to just under $269 million at the end of the second quarter.”

All comparisons presented below are to the quarter ended June 30, 2008 unless otherwise indicated.

MOBILE MODULAR

For the second quarter of 2009, the Company’s Mobile Modular division reported a 3% increase in income from operations to $12.2 million. Rental revenues decreased 7% to $23.5 million, which resulted in a decrease in gross profit on rental revenues of 1% to $15.4 million. Sales revenues increased 45% to $7.0 million with gross profit on sales increasing 61% to $2.1 million due to a higher mix of sales of used equipment having higher gross margins. Selling and administrative expenses decreased 1% to $7.1 million.

TRS-RENTELCO

For the second quarter of 2009, the Company’s TRS-RenTelco division reported a 77% decrease in income from operations to $1.4 million. Rental revenues decreased 24% to $17.8 million, which resulted in a decrease in gross profit on rental revenues of 49% to $5.0 million. Sales revenues decreased 29% to $5.3 million with gross profit on sales decreasing 26% to $1.6 million due to a lower mix of sales of new equipment. Selling and administrative expenses decreased 12% to $5.6 million.

ADLER TANKS

For the second quarter of 2009, the Company’s Adler Tanks division, which was acquired on December 11, 2008, reported income from operations of $0.6 million. Rental revenues were $3.7 million, with gross profit on rental revenues of $2.3 million. Rental related services revenues were $1.4 million, with gross profit on rental related services revenues of $0.4 million. Selling and administrative expenses were $2.1 million.

OTHER SECOND QUARTER HIGHLIGHTS

• Debt decreased $25.1 million during the quarter to $268.6 million, with the Company’s funded debt (notes payable) to equity ratio decreasing from 1.22 to 1 at December 31, 2008 to 1.05 to 1 as of June 30, 2009. As of June 30, 2009, the Company had capacity to borrow an additional $110.4 million under its lines of credit.
• Dividend rate increased 10% to $0.22 per share for the second quarter 2009. On an annualized basis, this dividend represents a 4.6% yield on the August 5, 2009 close price of $19.16.
• Adjusted EBITDA decreased 12% to $30.3 million for the second quarter of 2009. At June 30, 2009, the Company’s ratio of funded debt to the last twelve months actual Adjusted EBITDA was 1.99 to 1.00 compared to 2.15 to 1.00 at December 31, 2008. Adjusted EBITDA is defined as net income before minority interest in income of subsidiary, interest expense, provision for income taxes, depreciation, amortization and other non-cash stock-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 SEC filings. You can visit the Company’s web site at www.mgrc.com to access information on McGrath RentCorp, including the latest Form 10-K and 10-Q and other SEC filings.

FINANCIAL GUIDANCE

The Company is narrowing its previous 2009 full-year earnings guidance range of $1.30 to $1.45 per diluted share to an updated range of $1.30 to $1.40 per diluted share. Such a forward-looking statement reflects McGrath RentCorp’s expectations as of August 6, 2009. Actual 2009 full-year earnings per share results may be materially different since they are affected by many factors, including those factors outlined in the “forward-looking statements” paragraph at the end of this press release.

ABOUT MCGRATH RENTCORP

Founded in 1979, McGrath RentCorp is a diversified business to business rental company. Under the trade name Mobile Modular Management Corporation (Mobile Modular), it rents and sells modular buildings to fulfill customers’ temporary and permanent classroom and office space needs in California, Texas, Florida, North Carolina, Georgia, Maryland and Virginia. The Company’s TRS-RenTelco division rents and sells electronic test equipment and is one of the leading rental providers of general purpose and communications test equipment in the Americas. In 2008, the Company purchased the assets of Adler Tank Rentals, a New Jersey based supplier of rental containment solutions for hazardous and nonhazardous liquids and solids with operations today in the Northeast, Mid-Atlantic, Midwest, Southeast, Southwest and West. Also, in 2008, under the trade name TRS-Environmental, the Company entered the environmental test equipment rental business serving the Americas. In 2008, the Company also entered the portable storage container rental business in Northern California under the trade name Mobile Modular Portable Storage, and in 2009 expanded this business into Southern California, Texas and Florida. For more information on McGrath RentCorp, visit www.mgrc.com

CONFERENCE CALL NOTE

As previously announced in its press release of July 16, 2009, McGrath RentCorp will host a conference call at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) on August 6, 2009 to discuss the second quarter 2009 results. To participate in the teleconference, dial 1-877-941-1427 (in the U.S.), or 1-480-629-9664 (outside the US), or visit the investor relations section of the Company’s website at www.mgrc.com. Telephone replay of the call will be available for 48 hours following the call by dialing 1-800-406-7325 (in the U.S.), or 1-303-590-3000 (outside the U.S.). The pass code for the call replay is 4117242.

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 McGrath RentCorp’s business strategy, future operations, financial position, estimated revenues or losses, projected costs, prospects, plans and objectives are forward looking statements. These forward-looking statements appear in a number of places and can be identified by the use of forward-looking terminology such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “future,” “intend,” “hopes,” “goals” or “certain” or the negative of these terms or other variations or comparable terminology. Our hopes that we may have seen a bottoming in our monthly rental billing rate in May and June, our belief that Adler’s increased market demand and our investments in new geographies will reflect stronger financial performance for the tank rental business in the second half of 2009, and our goals of building new rental initiatives while managing costs tightly and paying down debt are all forward-looking statements.

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: the continuation and deepening of the current recession and financial, budget and credit crises, particularly in California, including the impact on funding for school facility projects and residential and commercial construction sectors, our customers need and ability to rent our products, and the Company’s ability to access additional capital in the current uncertain capital and credit market; changes in state funding for education and the timing and impact of federal stimulus monies; the effectiveness of management’s strategies and decisions, general economic, stock market and business conditions, including in the states and countries where we sell or rent our products; continuing demand for our products; hiring, retention and motivation of key personnel; failure by third parties to manufacture and deliver our products in a timely manner and to our specifications; the cost of and our ability to successfully implement information system upgrades; our ability to finance expansion and to locate and consummate acquisitions and to successfully integrate, expand and operate Adler Tanks and other acquisitions; fluctuations in interest rates and the Company’s ability to manage credit risk; our ability to effectively manage our rental assets; the risk that we may be subject to litigation under environmental, health and safety and product liability laws and claims from employees, vendors and other third parties; fluctuations in the Company’s effective tax rate; changes in financial accounting standards; our failure to comply with internal control requirements; catastrophic loss to our facilities; effect on the Company’s Adler Tanks business from reductions to the price of oil; new or modified statutory or regulatory requirements; success of the Company’s strategic growth initiatives; risks associated with doing business with government entities; seasonality of our businesses; intense industry competition including increasing price pressure; our ability to timely deliver, install and redeploy our rental products; significant increases in raw materials, labor, and other costs; and risks associated with operating internationally, including unfavorable exchange rates for the U.S. dollar against our Canadian dollar denominated revenues.

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-Q for the quarter ended June 30, 2009 filed with the SEC on August 6, 2009 and in our Form 10-K for the year ended December 31, 2008 filed with the SEC on February 25, 2009, and those that may be identified from time to time in our reports and registration statements filed with the SEC. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. Forward-looking statements are made only as of the date of this press release and are based on management’s reasonable assumptions, however these assumptions can be wrong or affected by known or unknown risks and uncertainties. Readers should not place undue reliance on these forward-looking statements and are cautioned that any such forward-looking statements are not guarantees of future performance. We are under no duty to update any of the forward-looking statements after the date of this press release to conform such statements to actual results or to changes in our expectations.

MCGRATH RENTCORP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands, except per share amounts)		2009			2008			2009			2008
REVENUES
Rental	$	45,083		$	48,846		$	93,455		$	97,082
Rental Related Services		8,162			7,490			17,299			14,832
Rental Operations		53,245			56,336			110,754			111,914
Sales		12,580			17,001			21,535			26,174
Other		649			616			1,340			1,280
Total Revenues		66,474			73,953			133,629			139,368
COSTS AND EXPENSES
Direct Costs of Rental Operations
Depreciation of Rental Equipment		14,358			14,044			29,109			27,462
Rental Related Services		6,319			5,536			13,140			10,751
Other		8,047			9,591			16,577			17,681
Total Direct Costs of Rental Operations		28,724			29,171			58,826			55,894
Costs of Sales		8,799			11,667			15,472			17,465
Total Costs of Revenues		37,523			40,838			74,298			73,359
Gross Profit		28,951			33,115			59,331			66,009
Selling and Administrative Expenses		15,465			14,230			31,042			27,774
Income from Operations		13,486			18,885			28,289			38,235
Interest Expense		1,953			2,291			3,836			4,758
Income Before Provision for Income Taxes		11,533			16,594			24,453			33,477
Provision for Income Taxes		4,509			6,505			9,561			13,123
Net Income	$	7,024		$	10,089		$	14,892		$	20,354
Earnings Per Share:
Basic	$	0.30		$	0.43		$	0.63		$	0.85
Diluted	$	0.30		$	0.42		$	0.62		$	0.85
Shares Used in Per Share Calculation:
Basic		23,738			23,641			23,726			23,810
Diluted		23,804			23,890			23,827			23,977
Cash Dividends Declared Per Share	$	0.22		$	0.20		$	0.44		$	0.40

MCGRATH RENTCORP
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
	June 30,				December 31,
(in thousands)		2009				2008
ASSETS
Cash	$	454			$	1,325
Accounts Receivable, net of allowance for doubtful
accounts of $1,700 in 2009 and $1,400 in 2008		66,756				86,011
Income Taxes Receivable		1,987				7,927
Rental Equipment, at cost:
Relocatable Modular Buildings		503,137				503,678
Electronic Test Equipment		248,069				255,778
Liquid and Solid Containment Tanks and Boxes		66,095				46,288
		817,301				805,744
Less Accumulated Depreciation		(267,421	)			(253,506	)
Rental Equipment, net		549,880				552,238
Property, Plant and Equipment, net		74,989				76,763
Prepaid Expenses and Other Assets		17,867				18,633
Intangible Assets, net		13,749				14,136
Goodwill		27,661				27,464
Total Assets	$	753,343			$	784,497
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Notes Payable	$	268,583			$	305,500
Accounts Payable and Accrued Liabilities		53,987				55,471
Deferred Income		20,355				28,055
Deferred Income Taxes, net		153,587				145,590
Total Liabilities		496,512				534,616
Shareholders’ Equity:
Common Stock, no par value -
Authorized -- 40,000 shares
Issued and Outstanding -- 23,749 shares in 2009 and
23,709 shares in 2008		48,255				45,754
Retained Earnings		208,576				204,127
Total Shareholders’ Equity		256,831				249,881
Total Liabilities and Shareholders’ Equity	$	753,343			$	784,497

MCGRATH RENTCORP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
	Six Months Ended June 30,
(in thousands)		2009				2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	14,892			$	20,354
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation and Amortization		32,041				28,749
Provision for Doubtful Accounts		722				654
Non-Cash Stock-Based Compensation		1,953				1,919
Gain on Sale of Rental Equipment		(5,202	)			(4,824	)
Change In:
Accounts Receivable		18,533				(2,312	)
Income Taxes Receivable		5,940				—
Prepaid Expenses and Other Assets		629				(2,107	)
Accounts Payable and Accrued Liabilities		(4,140	)			(2,725	)
Deferred Income		(7,700	)			(4,927	)
Deferred Income Taxes		7,997				10,576
Net Cash Provided by Operating Activities		65,665				45,357
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments related to Acquisition of Adler Tanks		(1,099	)			—
Purchase of Rental Equipment		(33,673	)			(54,665	)
Purchase of Property, Plant and Equipment		(612	)			(11,308	)
Proceeds from Sale of Rental Equipment		15,175				12,558
Net Cash Used in Investing Activities		(20,209	)			(53,415	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Borrowings (Payments) Under Bank Lines of Credit		(24,917	)			48,996
Principal Payments on Senior Notes		(12,000	)			(12,000	)
Proceeds from the Exercise of Stock Options		518				663
Excess Tax Benefit from Exercise and Disqualifying Disposition of Stock Options		34				133
Repurchase of Common Stock		—				(24,418	)
Payment of Dividends		(9,962	)			(9,104	)
Net Cash (Used in) Provided by Financing Activities		(46,327	)			4,270
Net Decrease in Cash		(871	)			(3,788	)
Cash Balance, beginning of period		1,325				5,090
Cash Balance, end of period	$	454			$	1,302
Interest Paid, during the period	$	4,271			$	5,059
Income Taxes Paid, during the period	$	1,537			$	2,415
Dividends Declared, not yet paid	$	5,225			$	4,713
Rental Equipment Acquisitions, not yet paid	$	10,876			$	10,432

MCGRATH RENTCORP BUSINESS SEGMENT DATA (unaudited) Three Months Ended June 30, 2009
(dollar amounts in thousands)	Mobile Modular			TRS- RenTelco			Adler Tanks			Enviroplex			Consolidated
Revenues
Rental	$	23,534		$	17,803		$	3,746		$	—		$	45,083
Rental Related Services		6,340			426			1,396			—			8,162
Rental Operations		29,874			18,229			5,142			—			53,245
Sales		7,034			5,294			54			198			12,580
Other		143			498			8			—			649
Total Revenues		37,051			24,021			5,204			198			66,474
Costs and Expenses
Direct Costs of Rental Operations:
Depreciation of Rental Equipment		3,412			10,166			780			—			14,358
Rental Related Services		4,789			511			1,019			—			6,319
Other		4,728			2,667			652			—			8,047
Total Direct Costs of Rental Operations		12,929			13,344			2,451			—			28,724
Costs of Sales		4,902			3,659			37			201			8,799
Total Costs of Revenues		17,831			17,003			2,488			201			37,523
Gross Profit (Loss)
Rental		15,394			4,970			2,314			—			22,678
Rental Related Services		1,551			(85	)		377			—			1,843
Rental Operations		16,945			4,885			2,691			—			24,521
Sales		2,132			1,635			17			(3	)		3,781
Other		143			498			8			—			649
Total Gross Profit (Loss)		19,220			7,018			2,716			(3	)		28,951
Selling and Administrative Expenses		7,064			5,639			2,132			630			15,465
Income (Loss) from Operations	$	12,156		$	1,379		$	584		$	(633	)		13,486
Interest Expense														1,953
Provision for Income taxes														4,509
Net Income													$	7,024
Other Information
Average Rental Equipment 1	$	476,314		$	248,580		$	55,468
Average Monthly Total Yield 2		1.65	%		2.39	%		2.25	%
Average Utilization 3		75.3	%		59.5	%		53.3	%
Average Monthly Rental Rate 4		2.19	%		4.01	%		4.23	%

1. Average Rental Equipment represents the cost of rental equipment excluding new equipment inventory and accessory equipment.
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 cost of rental equipment on rent by the total cost of rental equipment excluding new equipment inventory and accessory 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 June 30, 2008
(dollar amounts in thousands)	Mobile Modular			TRS- RenTelco			Adler Tanks	Enviroplex		Consolidated
Revenues
Rental	$	25,277		$	23,569		—	$	—	$	48,846
Rental Related Services		7,029			461		—		—		7,490
Rental Operations		32,306			24,030		—		—		56,336
Sales		4,861			7,491		—		4,649		17,001
Other		159			457		—		—		616
Total Revenues		37,326			31,978		—		4,649		73,953
Costs and Expenses
Direct Costs of Rental Operations:
Depreciation of Rental Equipment		3,248			10,796		—		—		14,044
Rental Related Services		5,059			477		—		—		5,536
Other		6,520			3,071		—		—		9,591
Total Direct Costs of Rental Operations		14,827			14,344		—		—		29,171
Costs of Sales		3,534			5,290		—		2,843		11,667
Total Costs of Revenues		18,361			19,634		—		2,843		40,838
Gross Profit (Loss)
Rental		15,509			9,702		—		—		25,211
Rental Related Services		1,970			(16	)	—		—		1,954
Rental Operations		17,479			9,686		—		—		27,165
Sales		1,327			2,201		—		1,806		5,334
Other		159			457		—		—		616
Total Gross Profit		18,965			12,344		—		1,806		33,115
Selling and Administrative Expenses		7,137			6,437		—		656		14,230
Income from Operations	$	11,828		$	5,907		—	$	1,150		18,885
Interest Expense											2,291
Provision for Income taxes											6,505
Net Income										$	10,089
Other Information
Average Rental Equipment 1	$	454,107		$	248,182		—
Average Monthly Total Yield 2		1.86	%		3.17	%	—
Average Utilization 3		82.0	%		69.4	%	—
Average Monthly Rental Rate 4		2.26	%		4.56	%	—

1. Average Rental Equipment represents the cost of rental equipment excluding new equipment inventory and accessory equipment.
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 cost of rental equipment on rent by the total cost of rental equipment excluding new equipment inventory and accessory 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) Six Months Ended June 30, 2009
(dollar amounts in thousands)	Mobile Modular			TRS- RenTelco			Adler Tanks			Enviroplex			Consolidated
Revenues
Rental	$	48,389		$	37,301		$	7,765		$	—		$	93,455
Rental Related Services		13,533			897			2,869			—			17,299
Rental Operations		61,922			38,198			10,634			—			110,754
Sales		10,480			10,238			54			763			21,535
Other		305			1,020			15			—			1,340
Total Revenues		72,707			46,456			10,703			763			133,629
Costs and Expenses
Direct Costs of Rental Operations:
Depreciation of Rental Equipment		6,842			20,806			1,461			—			29,109
Rental Related Services		10,131			956			2,053			—			13,140
Other		9,752			5,672			1,153			—			16,577
Total Direct Costs of Rental Operations		26,725			27,434			4,667			—			58,826
Costs of Sales		7,477			7,205			37			753			15,472
Total Costs of Revenues		34,202			34,639			4,704			753			74,298
Gross Profit (Loss)
Rental		31,795			10,823			5,151			—			47,769
Rental Related Services		3,402			(59	)		816			—			4,159
Rental Operations		35,197			10,764			5,967			—			51,928
Sales		3,003			3,033			17			10			6,063
Other		305			1,020			15			—			1,340
Total Gross Profit		38,505			14,817			5,999			10			59,331
Selling and Administrative Expenses		14,261			11,416			3,984			1,381			31,042
Income (Loss) from Operations	$	24,244		$	3,401		$	2,015		$	(1,371	)		28,289
Interest Expense														3,836
Provision for Income taxes														9,561
Net Income													$	14,892
Other Information
Average Rental Equipment 1	$	476,629		$	251,063		$	51,379
Average Monthly Total Yield 2		1.69	%		2.48	%		2.52	%
Average Utilization 3		76.8	%		60.5	%		58.7	%
Average Monthly Rental Rate 4		2.20	%		4.09	%		4.29	%

1. Average Rental Equipment represents the cost of rental equipment excluding new equipment inventory and accessory equipment.
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 cost of rental equipment on rent by the total cost of rental equipment excluding new equipment inventory and accessory 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) Six Months Ended June 30, 2008
(dollar amounts in thousands)	Mobile Modular			TRS- RenTelco			Adler Tanks	Enviroplex		Consolidated
Revenues
Rental	$	51,192		$	45,890		—	$	—	$	97,082
Rental Related Services		13,930			902		—		—		14,832
Rental Operations		65,122			46,792		—		—		111,914
Sales		7,733			11,969		—		6,472		26,174
Other		304			976		—		—		1,280
Total Revenues		73,159			59,737		—		6,472		139,368
Costs and Expenses
Direct Costs of Rental Operations:
Depreciation of Rental Equipment		6,488			20,974		—		—		27,462
Rental Related Services		9,891			860		—		—		10,751
Other		12,028			5,653		—		—		17,681
Total Direct Costs of Rental Operations		28,407			27,487		—		—		55,894
Costs of Sales		5,476			7,954		—		4,035		17,465
Total Costs of Revenues		33,883			35,441		—		4,035		73,359
Gross Profit
Rental		32,676			19,263		—		—		51,939
Rental Related Services		4,039			42		—		—		4,081
Rental Operations		36,715			19,305		—		—		56,020
Sales		2,257			4,015		—		2,437		8,709
Other		304			976		—		—		1,280
Total Gross Profit		39,276			24,296		—		2,437		66,009
Selling and Administrative Expenses		14,064			12,330		—		1,380		27,774
Income from Operations	$	25,212		$	11,966		—	$	1,057		38,235
Interest Expense											4,758
Provision for Income taxes											13,123
Net Income										$	20,354
Other Information
Average Rental Equipment 1	$	452,704		$	242,037		—
Average Monthly Total Yield 2		1.88	%		3.16	%	—
Average Utilization 3		82.3	%		69.2	%	—
Average Monthly Rental Rate 4		2.29	%		4.57	%	—

1. Average Rental Equipment represents the cost of rental equipment excluding new equipment inventory and accessory equipment.
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 cost of rental equipment on rent by the total cost of rental equipment excluding new equipment inventory and accessory 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 generally accepted accounting principles (“GAAP”), the Company presents Adjusted EBITDA which is defined by the Company as net income before minority interest in income of subsidiary, interest expense, provision for income taxes, depreciation, amortization, and non-cash stock-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 and evaluate the Company’s ability to meet future capital expenditure and working capital requirements. Management believes the exclusion of non-cash charges, including stock-based compensation, is useful in measuring the Company’s cash available to operations and the performance of the Company. Because we find 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 in the United States 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 stock-based compensation charges and income from the minority interest in the Company’s Enviroplex subsidiary. 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. Therefore, Adjusted EBITDA should only be used to evaluate the Company’s results of operations in conjunction with the corresponding GAAP measures. The presentation of Adjusted EBITDA is not meant to be considered in isolation or as a substitute for the most directly comparable 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. Since Adjusted EBITDA is a non-GAAP financial measure as defined by the Securities and Exchange Commission, the Company includes in the tables below reconciliations of Adjusted EBITDA to the most directly comparable financial measures calculated and presented in accordance with accounting principles generally accepted in the United States.

Reconciliation of Net Income to Adjusted EBITDA
(dollar amounts in thousands)	Three Months Ended June 30,								Six Months Ended June 30,								Twelve Months Ended June 30,
		2009				2008				2009				2008				2009				2008
Net Income	$	7,024			$	10,089			$	14,892			$	20,354			$	35,741			$	44,351
Minority Interest in Income of Subsidiary		—				—				—				—				—				79
Provision for Income Taxes		4,509				6,505				9,561				13,123				22,936				28,697
Interest		1,953				2,291				3,836				4,758				9,055				10,024
Income from Operations		13,486				18,885				28,289				38,235				67,732				83,151
Depreciation and Amortization		15,830				14,699				32,041				28,749				63,708				56,850
Non-Cash Stock-Based Compensation		978				987				1,953				1,919				3,801				3,672
Adjusted EBITDA 1	$	30,294			$	34,571			$	62,283			$	68,903			$	135,241			$	143,673
Adjusted EBITDA Margin 2		46	%			47	%			47	%			49	%			45	%			49	%

Reconciliation of Adjusted EBITDA to Net Cash Provided by Operating Activities
(dollar amounts in thousands)	Three Months Ended June 30,								Six Months Ended June 30,								Twelve Months Ended June 30,
		2009				2008				2009				2008				2009				2008
Adjusted EBITDA 1	$	30,294			$	34,571			$	62,283			$	68,903			$	135,241			$	143,673
Interest Paid		(2,468	)			(2,899	)			(4,271	)			(5,059	)			(9,285	)			(10,144	)
Income Taxes Paid		(1,070	)			(1,576	)			(1,537	)			(2,415	)			(3,703	)			(10,762	)
Gain on Sale of Rental Equipment		(3,504	)			(2,484	)			(5,202	)			(4,824	)			(11,563	)			(10,500	)
Change in certain assets and liabilities:
Accounts Receivable, net		6,598				(8,339	)			19,255				(1,657	)			7,571				(4,558	)
Income Taxes Receivable		5,940				—				5,940				—				5,940				—
Prepaid Expenses and Other Assets		(1,543	)			(3,102	)			629				(2,104	)			258				(2,780	)
Accounts Payable and Other Liabilities		1,321				4,857				(3,732	)			(2,560	)			(1,751	)			984
Deferred Income		(1,856	)			(1,272	)			(7,700	)			(4,927	)			(3,667	)			5,560
Net Cash Provided by Operating Activities	$	33,712			$	19,756			$	65,665			$	45,357			$	119,041			$	111,473

1. Adjusted EBITDA is defined as net income before minority interest in income of subsidiary, interest expense, provision for income taxes, depreciation, amortization, and non-cash stock-based compensation.
2. Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by total revenues for the period.

Source: McGrath RentCorp

McGrath RentCorp
Keith E. Pratt, Chief Financial Officer, 925-606-9200