McGrath RentCorp Announces Results for Second Quarter 2016
Rental revenues decrease 1%
Net income up 7%
EPS increases 19% to
Dennis Kakures, President and CEO of
“Although second quarter rental revenues were down slightly from a year ago, EPS and net income were up 19% and 7%, respectively. This is a reflection of stronger year-over-year sales and profitability in our Mobile Modular and Enviroplex businesses, which more than offset weakness at Adler Tank Rentals and relatively flat TRS-RenTelco profitability, and the favorable effect of a lower dilutive share count.
Modular division-wide rental revenues for the quarter increased
Mobile Modular Portable Storage continued to make good progress during the second quarter in building its customer following, increasing booking levels and growing rental revenues from a year ago. First month’s rent booking levels and rental revenues for the second quarter grew by 20% and 22%, respectively, from the same period a year ago. We are working hard to make each of our portable storage operating geographies increasingly successful. We are on track towards building a meaningful sized storage container rental business with attractive operating metrics.
Rental revenues for TRS-RenTelco, our electronics division, declined
Rental revenues at Adler Tank Rentals, our liquid and solid containment tank and box division, declined
We entered 2016 with many unknowns and forecasting challenges regarding the crude oil and natural gas industries’ evolving structural changes and their near-term impact to our liquid and solid containment rental business. Our first six months results for 2016 for Adler Tank Rentals are reflective of just how challenging an environment we are facing. However, business by business, we continue to focus on what we have control over towards improving return on invested capital (“ROIC”). Overall, our focus is to deploy less capital, and more selectively, for new rental assets over the next few years until we see sustainable higher ROIC levels.”
All comparisons presented below are for the quarter ended
Mobile Modular
For the second quarter of 2016, the Company’s Mobile Modular division reported a
TRS-RenTelco
For the second quarter of 2016, the Company’s TRS-RenTelco division reported a
For the second quarter of 2016, the Company’s
OTHER HIGHLIGHTS
- Debt decreased
$2.7 million during the quarter to$363.1 million , with the Company’s funded debt (notes payable) to equity ratio decreasing from 0.96 to 1 atMarch 31, 2016 to 0.95 to 1 atJune 30, 2016 . As ofJune 30, 2016 , the Company had capacity to borrow an additional$208.7 million under its lines of credit. - Dividend rate increased 2% to
$0.255 per share for the second quarter of 2016 compared to the second quarter of 2015. On an annualized basis, this dividend represents a 3.2% yield on theAugust 1, 2016 close price of$31.56 per share. - Adjusted EBITDA increased 2% to
$39.3 million for the second quarter of 2016 compared to the second quarter of 2015. AtJune 30, 2016 , the Company’s ratio of funded debt to the last twelve months actual Adjusted EBITDA was 2.20 to 1, compared to 2.22 to 1 atMarch 31 , 2016. Adjusted EBITDA is defined as net income before interest expense, provision for income taxes, depreciation, amortization and 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.
This press release should be read in conjunction with the financial statements and notes thereto included in the Company’s latest Forms 10-K, 10-Q and other
FINANCIAL OUTLOOK
The Company reconfirms its expectation that total Company operating profit, Adjusted EBITDA and earnings per diluted share for fiscal year 2016 will be comparable to 2015 results.
About
Founded in 1979,
Corporate – www.mgrc.com
Tanks and Boxes – www.adlertankrentals.com
Modular Buildings – www.mobilemodular.com
Portable Storage – www.mobilemodularcontainers.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 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. In particular, the statements made in this press release about the following topics are forward looking statements: optimism about the Company’s ability to build a meaningful sized storage container rental business with attractive operating metrics; the Company’s focus in its electronics division on selling lower utilized rental equipment to reduce depreciation expense and holding costs down in other operating areas; the Company’s focus on deploying less capital and more selectively, for new rental assets over the next few years until achievement of sustainable higher ROIC levels; and reconfirmation that the Company’s operating profit, Adjusted EBITDA and earnings per diluted share for 2016 will be comparable to 2015 in the section entitled “Financial Outlook.”
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 extent of and timetable for the recovery underway in our modular building division, 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 June 30, |
Six Months Ended June 30, |
|||||||||||||||
(amounts in thousands, except per share amounts) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
Revenues | ||||||||||||||||
Rental | $ | 66,747 | $ | 67,305 | $ | 133,279 | $ | 132,807 | ||||||||
Rental related services | 19,315 | 17,227 | 36,906 | 32,594 | ||||||||||||
Rental operations | 86,062 | 84,532 | 170,185 | 165,401 | ||||||||||||
Sales | 16,396 | 10,968 | 25,430 | 19,755 | ||||||||||||
Other | 647 | 526 | 1,189 | 1,058 | ||||||||||||
Total revenues | 103,105 | 96,026 | 196,804 | 186,214 | ||||||||||||
Costs and Expenses | ||||||||||||||||
Direct costs of rental operations: | ||||||||||||||||
Depreciation of rental equipment | 18,231 | 19,016 | 36,771 | 37,698 | ||||||||||||
Rental related services | 13,984 | 12,901 | 27,164 | 24,800 | ||||||||||||
Other | 16,713 | 16,226 | 32,540 | 31,437 | ||||||||||||
Total direct costs of rental operations | 48,928 | 48,143 | 96,475 | 93,935 | ||||||||||||
Costs of sales | 10,421 | 6,965 | 15,918 | 12,274 | ||||||||||||
Total costs of revenues | 59,349 | 55,108 | 112,393 | 106,209 | ||||||||||||
Gross profit | 43,756 | 40,918 | 84,411 | 80,005 | ||||||||||||
Selling and administrative expenses | 25,683 | 24,453 | 52,080 | 49,665 | ||||||||||||
Income from operations | 18,073 | 16,465 | 32,331 | 30,340 | ||||||||||||
Other income (expenses): | ||||||||||||||||
Interest expense | (2,990 | ) | (2,347 | ) | (6,546 | ) | (4,738 | ) | ||||||||
Foreign currency exchange gain (loss) | (77 | ) | (85 | ) | 74 | (253 | ) | |||||||||
Income before provision for income taxes | 15,006 | 14,033 | 25,859 | 25,349 | ||||||||||||
Provision for income taxes | 5,927 | 5,543 | 10,214 | 10,013 | ||||||||||||
Net income | $ | 9,079 | $ | 8,490 | $ | 15,645 | $ | 15,336 | ||||||||
Earnings per share: | ||||||||||||||||
Basic | $ | 0.38 | $ | 0.33 | $ | 0.66 | $ | 0.59 | ||||||||
Diluted | $ | 0.38 | $ | 0.32 | $ | 0.65 | $ | 0.58 | ||||||||
Shares used in per share calculation: | ||||||||||||||||
Basic | 23,900 | 26,142 | 23,881 | 26,117 | ||||||||||||
Diluted | 23,949 | 26,273 | 23,931 | 26,272 | ||||||||||||
Cash dividend declared per share | $ | 0.255 | $ | 0.250 | $ | 0.510 | $ | 0.500 | ||||||||
MCGRATH RENTCORP | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(UNAUDITED) | ||||||||
June 30, | December 31, | |||||||
(in thousands) | 2016 | 2015 | ||||||
Assets | ||||||||
Cash | $ | 1,238 | $ | 1,103 | ||||
Accounts receivable, net of allowance for doubtful accounts of $2,087 in 2016 and 2015 |
95,860 | 95,263 | ||||||
Income taxes receivable | — | 11,000 | ||||||
Rental equipment, at cost: | ||||||||
Relocatable modular buildings | 761,125 | 736,875 | ||||||
Electronic test equipment | 251,080 | 262,945 | ||||||
Liquid and solid containment tanks and boxes | 310,089 | 310,263 | ||||||
1,322,294 | 1,310,083 | |||||||
Less accumulated depreciation | (453,872 | ) | (440,482 | ) | ||||
Rental equipment, net | 868,422 | 869,601 | ||||||
Property, plant and equipment, net | 114,241 | 109,753 | ||||||
Prepaid expenses and other assets | 31,419 | 28,556 | ||||||
Intangible assets, net | 9,030 | 9,465 | ||||||
Goodwill | 27,808 | 27,808 | ||||||
Total assets | $ | 1,148,018 | $ | 1,152,549 | ||||
Liabilities and Shareholders’ Equity | ||||||||
Liabilities: | ||||||||
Notes payable | $ | 363,121 | $ | 381,281 | ||||
Accounts payable and accrued liabilities | 73,779 | 71,942 | ||||||
Deferred income | 38,349 | 36,288 | ||||||
Deferred income taxes, net | 289,456 | 283,351 | ||||||
Total liabilities | 764,705 | 772,862 | ||||||
Shareholders’ equity: | ||||||||
Common stock, no par value - Authorized 40,000 shares | ||||||||
Issued and outstanding - 23,907 shares as of June 30, 2016 and 23,851 shares as of December 31, 2015 | 101,313 | 101,046 | ||||||
Retained earnings | 282,121 | 278,708 | ||||||
Accumulated other comprehensive loss | (121 | ) | (67 | ) | ||||
Total shareholders’ equity | 383,313 | 379,687 | ||||||
Total liabilities and shareholders’ equity | $ | 1,148,018 | $ | 1,152,549 | ||||
MCGRATH RENTCORP | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(UNAUDITED) | ||||||||
Six Months Ended June 30, | ||||||||
(in thousands) | 2016 | 2015 | ||||||
Cash Flows from Operating Activities: | ||||||||
Net income | $ | 15,645 | $ | 15,336 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation and amortization | 41,417 | 42,171 | ||||||
Provision for doubtful accounts | 987 | 690 | ||||||
Share-based compensation | 1,586 | 1,953 | ||||||
Gain on sale of used rental equipment | (6,282 | ) | (5,565 | ) | ||||
Foreign currency exchange loss (gain) | (74 | ) | 253 | |||||
Change in: | ||||||||
Accounts receivable | (1,584 | ) | 6,630 | |||||
Income taxes receivable | 11,000 | — | ||||||
Prepaid expenses and other assets | (2,863 | ) | 7,981 | |||||
Accounts payable and accrued liabilities | 5,232 | 1,715 | ||||||
Deferred income | 2,061 | 587 | ||||||
Deferred income taxes | 6,105 | (6,514 | ) | |||||
Net cash provided by operating activities | 73,230 | 65,237 | ||||||
Cash Flows from Investing Activities: | ||||||||
Purchases of rental equipment | (45,715 | ) | (71,237 | ) | ||||
Purchases of property, plant and equipment | (8,698 | ) | (5,832 | ) | ||||
Proceeds from sale of used rental equipment | 13,059 | 11,815 | ||||||
Net cash used in investing activities | (41,354 | ) | (65,254 | ) | ||||
Cash Flows from Financing Activities: | ||||||||
Net borrowings under bank lines of credit | 1,814 | 34,699 | ||||||
Principal payments on Series A senior notes | (20,000 | ) | (20,000 | ) | ||||
Amortization of debt issuance cost | 26 | 26 | ||||||
Proceeds from the exercise of stock options | 37 | 1,458 | ||||||
Excess tax benefit (shortfall) from exercise of stock awards | (871 | ) | 313 | |||||
Taxes paid related to net share settlement of stock awards | (486 | ) | (584 | ) | ||||
Repurchase of common stock | — | (3,132 | ) | |||||
Payment of dividends | (12,253 | ) | (13,176 | ) | ||||
Net cash used in financing activities | (31,733 | ) | (396 | ) | ||||
Effect of foreign currency exchange rate changes on cash | (8 | ) | (15 | ) | ||||
Net increase (decrease) in cash | 135 | (428 | ) | |||||
Cash balance, beginning of period | 1,103 | 1,167 | ||||||
Cash balance, end of period | $ | 1,238 | $ | 739 | ||||
Supplemental Disclosure of Cash Flow Information: | ||||||||
Interest paid, during the period | $ | 6,646 | $ | 4,896 | ||||
Net income taxes paid, during the period | $ | 5,679 | $ | 1,490 | ||||
Dividends accrued during the period, not yet paid | $ | 6,135 | $ | 6,588 | ||||
Rental equipment acquisitions, not yet paid | $ | 3,935 | $ | 8,390 | ||||
MCGRATH RENTCORP | ||||||||||||||||||||
BUSINESS SEGMENT DATA (unaudited) | ||||||||||||||||||||
Three months ended June 30, 2016 | ||||||||||||||||||||
(dollar amounts in thousands) | Mobile Modular |
TRS- RenTelco |
Adler Tanks |
Enviroplex | Consolidated | |||||||||||||||
Revenues | ||||||||||||||||||||
Rental | $ | 31,637 | $ | 20,269 | $ | 14,841 | $ | — | $ | 66,747 | ||||||||||
Rental related services | 12,132 | 717 | 6,466 | — | 19,315 | |||||||||||||||
Rental operations | 43,769 | 20,986 | 21,307 | — | 86,062 | |||||||||||||||
Sales | 5,785 | 6,428 | 184 | 3,999 | 16,396 | |||||||||||||||
Other | 125 | 494 | 28 | — | 647 | |||||||||||||||
Total revenues | 49,679 | 27,908 | 21,519 | 3,999 | 103,105 | |||||||||||||||
Costs and Expenses | ||||||||||||||||||||
Direct costs of rental operations: | ||||||||||||||||||||
Depreciation | 5,221 | 8,998 | 4,012 | — | 18,231 | |||||||||||||||
Rental related services | 8,331 | 629 | 5,024 | — | 13,984 | |||||||||||||||
Other | 11,229 | 3,337 | 2,147 | — | 16,713 | |||||||||||||||
Total direct costs of rental operations | 24,781 | 12,964 | 11,183 | — | 48,928 | |||||||||||||||
Costs of sales | 4,264 | 3,402 | 201 | 2,554 | 10,421 | |||||||||||||||
Total costs of revenues | 29,045 | 16,366 | 11,384 | 2,554 | 59,349 | |||||||||||||||
Gross Profit (Loss) | ||||||||||||||||||||
Rental | 15,188 | 7,933 | 8,682 | — | 31,803 | |||||||||||||||
Rental related services | 3,801 | 88 | 1,442 | — | 5,331 | |||||||||||||||
Rental operations | 18,989 | 8,021 | 10,124 | — | 37,134 | |||||||||||||||
Sales | 1,520 | 3,027 | (17 | ) | 1,445 | 5,975 | ||||||||||||||
Other | 125 | 494 | 28 | — | 647 | |||||||||||||||
Total gross profit | 20,634 | 11,542 | 10,135 | 1,445 | 43,756 | |||||||||||||||
Selling and administrative expenses | 12,336 | 5,546 | 6,893 | 908 | 25,683 | |||||||||||||||
Income from operations | $ | 8,298 | $ | 5,996 | $ | 3,242 | $ | 537 | 18,073 | |||||||||||
Interest expense | (2,990 | ) | ||||||||||||||||||
Foreign currency exchange loss | (77 | ) | ||||||||||||||||||
Provision for income taxes | (5,927 | ) | ||||||||||||||||||
Net income | $ | 9,079 | ||||||||||||||||||
Other Information | ||||||||||||||||||||
Average rental equipment 1 | $ | 717,755 | $ | 254,970 | $ | 307,868 | ||||||||||||||
Average monthly total yield 2 | 1.47 | % | 2.65 | % | 1.61 | % | ||||||||||||||
Average utilization 3 | 75.8 | % | 59.5 | % | 49.4 | % | ||||||||||||||
Average monthly rental rate 4 | 1.94 | % | 4.45 | % | 3.25 | % | ||||||||||||||
- 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. - Average monthly total yield is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment for the period.
- 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.
- 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, 2015 | ||||||||||||||||||||
(dollar amounts in thousands) | Mobile Modular |
TRS- RenTelco |
Adler Tanks |
Enviroplex | Consolidated | |||||||||||||||
Revenues | ||||||||||||||||||||
Rental | $ | 27,680 | $ | 21,889 | $ | 17,736 | $ | — | $ | 67,305 | ||||||||||
Rental related services | 10,488 | 794 | 5,945 | — | 17,227 | |||||||||||||||
Rental operations | 38,168 | 22,683 | 23,681 | — | 84,532 | |||||||||||||||
Sales | 3,831 | 4,832 | 416 | 1,889 | 10,968 | |||||||||||||||
Other | 121 | 386 | 19 | — | 526 | |||||||||||||||
Total revenues | 42,120 | 27,901 | 24,116 | 1,889 | 96,026 | |||||||||||||||
Costs and Expenses | ||||||||||||||||||||
Direct costs of rental operations: | ||||||||||||||||||||
Depreciation | 4,719 | 10,325 | 3,972 | — | 19,016 | |||||||||||||||
Rental related services | 7,388 | 692 | 4,821 | — | 12,901 | |||||||||||||||
Other | 10,740 | 3,278 | 2,208 | — | 16,226 | |||||||||||||||
Total direct costs of rental operations | 22,847 | 14,295 | 11,001 | — | 48,143 | |||||||||||||||
Costs of sales | 2,711 | 2,165 | 742 | 1,347 | 6,965 | |||||||||||||||
Total costs of revenues | 25,558 | 16,460 | 11,743 | 1,347 | 55,108 | |||||||||||||||
Gross Profit (Loss) | ||||||||||||||||||||
Rental | 12,221 | 8,286 | 11,556 | — | 32,063 | |||||||||||||||
Rental related services | 3,100 | 102 | 1,124 | — | 4,326 | |||||||||||||||
Rental operations | 15,321 | 8,388 | 12,680 | — | 36,389 | |||||||||||||||
Sales | 1,120 | 2,667 | (326 | ) | 542 | 4,003 | ||||||||||||||
Other | 121 | 386 | 19 | — | 526 | |||||||||||||||
Total gross profit | 16,562 | 11,441 | 12,373 | 542 | 40,918 | |||||||||||||||
Selling and administrative expenses | 11,286 | 5,493 | 6,901 | 773 | 24,453 | |||||||||||||||
Income from operations | $ | 5,276 | $ | 5,948 | $ | 5,472 | $ | (231 | ) | 16,465 | ||||||||||
Interest expense | (2,347 | ) | ||||||||||||||||||
Foreign currency exchange loss | (85 | ) | ||||||||||||||||||
Provision for income taxes | (5,543 | ) | ||||||||||||||||||
Net income | $ | 8,490 | ||||||||||||||||||
Other Information | ||||||||||||||||||||
Average rental equipment 1 | $ | 655,479 | $ | 269,225 | $ | 302,697 | ||||||||||||||
Average monthly total yield 2 | 1.41 | % | 2.71 | % | 1.95 | % | ||||||||||||||
Average utilization 3 | 74.4 | % | 59.5 | % | 60.6 | % | ||||||||||||||
Average monthly rental rate 4 | 1.89 | % | 4.56 | % | 3.23 | % | ||||||||||||||
- 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. - Average monthly total yield is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment for the period.
- 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.
- 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, 2016 | ||||||||||||||||||||
(dollar amounts in thousands) | Mobile Modular |
TRS- RenTelco |
Adler Tanks |
Enviroplex | Consolidated | |||||||||||||||
Revenues | ||||||||||||||||||||
Rental | $ | 62,792 | $ | 41,197 | $ | 29,290 | $ | — | $ | 133,279 | ||||||||||
Rental related services | 23,337 | 1,501 | 12,068 | — | 36,906 | |||||||||||||||
Rental operations | 86,129 | 42,698 | 41,358 | — | 170,185 | |||||||||||||||
Sales | 8,432 | 12,262 | 589 | 4,147 | 25,430 | |||||||||||||||
Other | 202 | 932 | 55 | — | 1,189 | |||||||||||||||
Total revenues | 94,763 | 55,892 | 42,002 | 4,147 | 196,804 | |||||||||||||||
Costs and Expenses | ||||||||||||||||||||
Direct costs of rental operations: | ||||||||||||||||||||
Depreciation | 10,347 | 18,386 | 8,038 | — | 36,771 | |||||||||||||||
Rental related services | 16,321 | 1,265 | 9,578 | — | 27,164 | |||||||||||||||
Other | 20,790 | 6,976 | 4,774 | — | 32,540 | |||||||||||||||
Total direct costs of rental operations | 47,458 | 26,627 | 22,390 | — | 96,475 | |||||||||||||||
Costs of sales | 6,018 | 6,707 | 535 | 2,658 | 15,918 | |||||||||||||||
Total costs of revenues | 53,476 | 33,334 | 22,925 | 2,658 | 112,393 | |||||||||||||||
Gross Profit | ||||||||||||||||||||
Rental | 31,656 | 15,834 | 16,478 | — | 63,968 | |||||||||||||||
Rental related services | 7,016 | 236 | 2,490 | — | 9,742 | |||||||||||||||
Rental operations | 38,672 | 16,070 | 18,968 | — | 73,710 | |||||||||||||||
Sales | 2,413 | 5,556 | 54 | 1,489 | 9,512 | |||||||||||||||
Other | 202 | 932 | 55 | — | 1,189 | |||||||||||||||
Total gross profit | 41,287 | 22,558 | 19,077 | 1,489 | 84,411 | |||||||||||||||
Selling and administrative expenses | 24,798 | 11,343 | 14,155 | 1,784 | 52,080 | |||||||||||||||
Income (loss) from operations | $ | 16,489 | $ | 11,215 | $ | 4,922 | $ | (295 | ) | 32,331 | ||||||||||
Interest expense | (6,546 | ) | ||||||||||||||||||
Foreign currency exchange loss | 74 | |||||||||||||||||||
Provision for income taxes | (10,214 | ) | ||||||||||||||||||
Net income | $ | 15,645 | ||||||||||||||||||
Other Information | ||||||||||||||||||||
Average rental equipment 1 | $ | 713,503 | $ | 257,767 | $ | 307,752 | ||||||||||||||
Average monthly total yield 2 | 1.47 | % | 2.66 | % | 1.60 | % | ||||||||||||||
Average utilization 3 | 76.0 | % | 59.5 | % | 49.7 | % | ||||||||||||||
Average monthly rental rate 4 | 1.93 | % | 4.48 | % | 3.19 | % | ||||||||||||||
- 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. - Average monthly total yield is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment for the period.
- 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.
- 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, 2015 | ||||||||||||||||||||
(dollar amounts in thousands) | Mobile Modular |
TRS- RenTelco |
Adler Tanks |
Enviroplex | Consolidated | |||||||||||||||
Revenues | ||||||||||||||||||||
Rental | $ | 54,088 | $ | 44,000 | $ | 34,719 | $ | — | $ | 132,807 | ||||||||||
Rental related services | 19,591 | 1,450 | 11,553 | — | 32,594 | |||||||||||||||
Rental operations | 73,679 | 45,450 | 46,272 | — | 165,401 | |||||||||||||||
Sales | 7,091 | 9,772 | 691 | 2,201 | 19,755 | |||||||||||||||
Other | 234 | 773 | 51 | — | 1,058 | |||||||||||||||
Total revenues | 81,004 | 55,995 | 47,014 | 2,201 | 186,214 | |||||||||||||||
Costs and Expenses | ||||||||||||||||||||
Direct costs of rental operations: | ||||||||||||||||||||
Depreciation | 9,280 | 20,477 | 7,941 | — | 37,698 | |||||||||||||||
Rental related services | 14,169 | 1,390 | 9,241 | — | 24,800 | |||||||||||||||
Other | 20,265 | 6,673 | 4,499 | — | 31,437 | |||||||||||||||
Total direct costs of rental operations | 43,714 | 28,540 | 21,681 | — | 93,935 | |||||||||||||||
Costs of sales | 5,024 | 4,704 | 953 | 1,593 | 12,274 | |||||||||||||||
Total costs of revenues | 48,738 | 33,244 | 22,634 | 1,593 | 106,209 | |||||||||||||||
Gross Profit (Loss) | ||||||||||||||||||||
Rental | 24,543 | 16,850 | 22,279 | — | 63,672 | |||||||||||||||
Rental related services | 5,422 | 60 | 2,312 | — | 7,794 | |||||||||||||||
Rental operations | 29,965 | 16,910 | 24,591 | — | 71,466 | |||||||||||||||
Sales | 2,067 | 5,068 | (262 | ) | 608 | 7,481 | ||||||||||||||
Other | 234 | 773 | 51 | — | 1,058 | |||||||||||||||
Total gross profit | 32,266 | 22,751 | 24,380 | 608 | 80,005 | |||||||||||||||
Selling and administrative expenses | 22,642 | 11,611 | 13,819 | 1,593 | 49,665 | |||||||||||||||
Income (loss) from operations | $ | 9,624 | $ | 11,140 | $ | 10,561 | $ | (985 | ) | $ | 30,340 | |||||||||
Interest expense | (4,738 | ) | ||||||||||||||||||
Foreign currency exchange loss | (253 | ) | ||||||||||||||||||
Provision for income taxes | (10,013 | ) | ||||||||||||||||||
Net income | $ | 15,336 | ||||||||||||||||||
Other Information | ||||||||||||||||||||
Average rental equipment 1 | $ | 648,446 | $ | 266,528 | $ | 301,580 | ||||||||||||||
Average monthly total yield 2 | 1.39 | % | 2.75 | % | 1.92 | % | ||||||||||||||
Average utilization 3 | 74.3 | % | 59.8 | % | 60.9 | % | ||||||||||||||
Average monthly rental rate 4 | 1.87 | % | 4.60 | % | 3.15 | % | ||||||||||||||
- 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. - Average monthly total yield is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment for the period.
- 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.
- 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 June 30, |
Six Months Ended June 30, |
Twelve Months Ended June 30, |
|||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | 2016 | 2015 | |||||||||||||||||||
Net income | $ | 9,079 | $ | 8,490 | $ | 15,645 | $ | 15,336 | $ | 40,779 | $ | 42,969 | ||||||||||||
Provision for income taxes | 5,927 | 5,543 | 10,214 | 10,013 | 26,108 | 29,211 | ||||||||||||||||||
Interest | 2,990 | 2,347 | 6,546 | 4,738 | 11,900 | 9,480 | ||||||||||||||||||
Depreciation and amortization | 20,557 | 21,265 | 41,417 | 42,171 | 83,526 | 83,314 | ||||||||||||||||||
EBITDA | 38,553 | 37,645 | 73,822 | 72,258 | 162,313 | 164,974 | ||||||||||||||||||
Share-based compensation | 730 | 1,022 | 1,586 | 1,953 | 3,032 | 3,823 | ||||||||||||||||||
Adjusted EBITDA 1 | $ | 39,283 | $ | 38,667 | $ | 75,408 | $ | 74,211 | $ | 165,345 | $ | 168,797 | ||||||||||||
Adjusted EBITDA margin 2 | 38 | % | 40 | % | 38 | % | 40 | % | 40 | % | 41 | % | ||||||||||||
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, |
|||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | 2016 | 2015 | |||||||||||||||||||
Adjusted EBITDA 1 | $ | 39,283 | $ | 38,667 | $ | 75,408 | $ | 74,211 | $ | 165,345 | $ | 168,797 | ||||||||||||
Interest paid | (3,660 | ) | (2,888 | ) | (6,646 | ) | (4,896 | ) | (11,791 | ) | (9,772 | ) | ||||||||||||
Net income taxes paid | (4,973 | ) | (1,174 | ) | (5,679 | ) | (1,490 | ) | (6,687 | ) | (15,239 | ) | ||||||||||||
Gain on sale of used rental equipment | (3,316 | ) | (2,696 | ) | (6,282 | ) | (5,565 | ) | (12,619 | ) | (14,489 | ) | ||||||||||||
Foreign currency exchange loss (gain) | 77 | 65 | (74 | ) | 253 | 161 | 574 | |||||||||||||||||
Change in certain assets and liabilities: | ||||||||||||||||||||||||
Accounts receivable, net | (3,977 | ) | (4,613 | ) | (597 | ) | 7,320 | (1,886 | ) | (4,890 | ) | |||||||||||||
Income taxes receivable | — | — | 11,000 | — | — | — | ||||||||||||||||||
Prepaid expenses and other assets | (4,812 | ) | 1,857 | (2,863 | ) | 7,981 | 1,812 | (3,410 | ) | |||||||||||||||
Accounts payable and other liabilities | 13,451 | 1,032 | 6,902 | (13,164 | ) | 9,535 | 7,811 | |||||||||||||||||
Deferred income | 1,525 | 367 | 2,061 | 587 | 8,623 | 3,643 | ||||||||||||||||||
Net cash provided by operating activities | $ | 33,598 | $ | 30,617 | $ | 73,230 | $ | 65,237 | $ | 152,493 | $ | 133,025 | ||||||||||||
- Adjusted EBITDA is defined as net income before interest expense, provision for income taxes, depreciation, amortization, and share-based compensation.
- Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by total revenues for the period.
FOR INFORMATION CONTACT:Keith E. Pratt Chief Financial Officer 925 606 9200