McGrath RentCorp Announces Results for Second Quarter 2017
SECOND QUARTER 2017 COMPANY HIGHLIGHTS:
- Income from operations increased 21% year-over-year to
$21.8 million . - Rental revenues increased 5% year-over-year to
$70.0 million . - Adjusted EBITDA1 increased 7% million to
$41.9 million for the second quarter of 2017. - Dividend rate increased 2% year-over-year to
$0.26 per share for the second quarter of 2017. On an annualized basis, this dividend represents a 2.8% yield on theAugust 1, 2017 close price of$36.54 per share.
“We were pleased with our second quarter performance. Mobile Modular accounted for the majority of the Company’s 21% operating profit increase compared to a year ago, as a result of higher gross profit from rental operations and higher sales gross profit. TRS-RenTelco also achieved operating profit growth through effective management of depreciation expense, while the contribution from Adler Tank Rentals was down slightly compared to a year ago.
Mobile Modular rental revenues for the quarter increased 11% from a year ago as rental rates, fleet utilization and equipment on rent all increased. Rental revenue growth continued to be healthy across commercial and education markets, as well as in our Portable Storage business.
TRS-RenTelco rental revenues for the quarter declined 2% as a result of lower communications test equipment business activity. Communications test equipment rental revenues declined by 9%, but were partly offset by a 5% increase for general-purpose test equipment. While average equipment utilization increased, average rental rates declined for the quarter, primarily due to the business activity mix shift from communications to general-purpose test equipment.
Adler Tank Rentals rental revenues for the quarter increased 2% from a year ago. Upstream oil and natural gas rental revenue declined from 11% to 9% of total Adler rental revenues, but was more than offset by growth in other market verticals. Average equipment on rent increased 10% to
Our second quarter results are beginning to reflect some impact from initiatives that we have launched through our return on invested capital (or ROIC) work, particularly for Mobile Modular. We are also maintaining discipline on new rental equipment capital spending while selectively selling some non-core equipment.
While end market conditions remain challenging for Adler Tank Rentals, and to a lesser extent TRS-RenTelco, we are encouraged by our second quarter and year to date results. Based on these results and our current outlook for the second half of the year we are raising our financial outlook and expect 2017 total Company operating profit to increase 9% to 12% above 2016, compared to our prior expectation of a 3% to 5% increase.”
________________________________
- 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.
DIVISION HIGHLIGHTS:
All comparisons presented below are for the quarter ended
MOBILE MODULAR
For the second quarter of 2017, the Company’s Mobile Modular division reported income from operations of
TRS-RENTELCO
For the second quarter of 2017, the Company’s TRS-RenTelco division reported income from operations of
For the second quarter of 2017, the Company’s
FINANCIAL OUTLOOK:
Based upon the Company’s year to date results and current outlook for the second half of the year, the Company is raising its financial outlook and expects 2017 total Company operating profit to increase 9% to 12% above 2016, compared to our prior expectation of a 3% to 5% increase.
ABOUT
Founded in 1979,
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
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 full year 2017 operating profit outlook in the CEO comments and “Financial Outlook” sections are forward-looking.
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; the continued recovery of the
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, |
||||||||||||||
(in thousands, except per share amounts) | 2017 |
2016 |
2017 |
2016 |
|||||||||||
Revenues | |||||||||||||||
Rental | $ | 69,953 | $ | 66,747 | $ | 137,931 | $ | 133,279 | |||||||
Rental related services | 18,796 | 19,315 | 36,731 | 36,906 | |||||||||||
Rental operations | 88,749 | 86,062 | 174,662 | 170,185 | |||||||||||
Sales | 20,187 | 16,396 | 28,482 | 25,430 | |||||||||||
Other | 646 | 647 | 1,275 | 1,189 | |||||||||||
Total revenues | 109,582 | 103,105 | 204,419 | 196,804 | |||||||||||
Costs and Expenses | |||||||||||||||
Direct costs of rental operations: | |||||||||||||||
Depreciation of rental equipment | 17,242 | 18,231 | 34,621 | 36,771 | |||||||||||
Rental related services | 14,312 | 14,677 | 28,145 | 28,402 | |||||||||||
Other | 16,039 | 16,020 | 31,398 | 31,302 | |||||||||||
Total direct costs of rental operations | 47,593 | 48,928 | 94,164 | 96,475 | |||||||||||
Costs of sales | 12,778 | 10,421 | 17,374 | 15,918 | |||||||||||
Total costs of revenues | 60,371 | 59,349 | 111,538 | 112,393 | |||||||||||
Gross profit | 49,211 | 43,756 | 92,881 | 84,411 | |||||||||||
Selling and administrative expenses | 27,365 | 25,683 | 55,213 | 52,080 | |||||||||||
Income from operations | 21,846 | 18,073 | 37,668 | 32,331 | |||||||||||
Other income (expense): | |||||||||||||||
Interest expense | (2,949 | ) | (2,990 | ) | (5,738 | ) | (6,546 | ) | |||||||
Foreign currency exchange gain (loss) | 11 | (77 | ) | 237 | 74 | ||||||||||
Income before provision for income taxes | 18,908 | 15,006 | 32,167 | 25,859 | |||||||||||
Provision for income taxes | 7,447 | 5,927 | 12,733 | 10,214 | |||||||||||
Net income | $ | 11,461 | $ | 9,079 | $ | 19,434 | $ | 15,645 | |||||||
Earnings per share: | |||||||||||||||
Basic | $ | 0.48 | $ | 0.38 | $ | 0.81 | $ | 0.66 | |||||||
Diluted | $ | 0.48 | $ | 0.38 | $ | 0.80 | $ | 0.65 | |||||||
Shares used in per share calculation: | |||||||||||||||
Basic | 23,985 | 23,900 | 23,968 | 23,881 | |||||||||||
Diluted | 24,092 | 23,949 | 24,164 | 23,931 | |||||||||||
Cash dividends declared per share | $ | 0.260 | $ | 0.255 | $ | 0.520 | $ | 0.510 | |||||||
MCGRATH RENTCORP CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) |
||||||||
June 30, |
December 31, | |||||||
(in thousands) | 2017 | 2016 |
||||||
Assets | ||||||||
Cash | $ | 1,871 | $ | 852 | ||||
Accounts receivable, net of allowance for doubtful accounts of $1,987 in 2017 and $2,087 in 2016 |
96,539 | 96,877 | ||||||
Rental equipment, at cost: | ||||||||
Relocatable modular buildings | 782,503 | 769,190 | ||||||
Electronic test equipment | 249,935 | 246,325 | ||||||
Liquid and solid containment tanks and boxes | 309,784 | 308,542 | ||||||
1,342,222 | 1,324,057 | |||||||
Less accumulated depreciation | (479,015 | ) | (467,686 | ) | ||||
Rental equipment, net | 863,207 | 856,371 | ||||||
Property, plant and equipment, net | 118,117 | 112,190 | ||||||
Prepaid expenses and other assets | 34,422 | 25,583 | ||||||
Intangible assets, net | 8,159 | 8,595 | ||||||
Goodwill | 27,808 | 27,808 | ||||||
Total assets | $ | 1,150,123 | $ | 1,128,276 | ||||
Liabilities and Shareholders' Equity | ||||||||
Liabilities: | ||||||||
Notes payable | $ | 330,287 | $ | 326,266 | ||||
Accounts payable and accrued liabilities | 82,332 | 78,205 | ||||||
Deferred income | 42,533 | 37,499 | ||||||
Deferred income taxes, net | 292,606 | 292,019 | ||||||
Total liabilities | 747,758 | 733,989 | ||||||
Shareholders’ equity: | ||||||||
Common stock, no par value - Authorized 40,000 shares | ||||||||
Issued and outstanding - 23,992 shares as of June 30, 2017 and 23,948 shares as of December 31, 2016 |
103,040 | 101,821 | ||||||
Retained earnings | 299,452 | 292,521 | ||||||
Accumulated other comprehensive loss | (127 | ) | (55 | ) | ||||
Total shareholders’ equity | 402,365 | 394,287 | ||||||
Total liabilities and shareholders’ equity | $ | 1,150,123 | $ | 1,128,276 | ||||
MCGRATH RENTCORP CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) |
||||||||
Six Months Ended June 30, | ||||||||
(in thousands) | 2017 | 2016 | ||||||
Cash Flows from Operating Activities : | ||||||||
Net income | $ | 19,434 | $ | 15,645 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation and amortization | 38,752 | 41,417 | ||||||
Provision for doubtful accounts | 597 | 987 | ||||||
Share-based compensation | 1,538 | 1,586 | ||||||
Gain on sale of used rental equipment | (7,914 | ) | (6,282 | ) | ||||
Foreign currency exchange gain | (237 | ) | (74 | ) | ||||
Amortization of debt issuance costs | 25 | 26 | ||||||
Change in: | ||||||||
Accounts receivable | (259 | ) | (1,584 | ) | ||||
Income taxes receivable | — | 11,000 | ||||||
Prepaid expenses and other assets | (8,839 | ) | (2,863 | ) | ||||
Accounts payable and accrued liabilities | 680 | 4,361 | ||||||
Deferred income | 5,034 | 2,061 | ||||||
Deferred income taxes | 587 | 6,105 | ||||||
Net cash provided by operating activities | 49,398 | 72,385 | ||||||
Cash Flows from Investing Activities: | ||||||||
Purchases of rental equipment | (46,118 | ) | (45,715 | ) | ||||
Purchases of property, plant and equipment | (9,623 | ) | (8,698 | ) | ||||
Proceeds from sales of used rental equipment | 16,057 | 13,059 | ||||||
Net cash used in investing activities | (39,684 | ) | (41,354 | ) | ||||
Cash Flows from Financing Activities: | ||||||||
Net borrowings under bank lines of credit | 23,996 | 1,814 | ||||||
Principal payments on Series A senior notes | (20,000 | ) | (20,000 | ) | ||||
Proceeds from the exercise of stock options | — | 37 | ||||||
Taxes paid related to net share settlement of stock awards | (319 | ) | (486 | ) | ||||
Payment of dividends | (12,390 | ) | (12,253 | ) | ||||
Net cash used in financing activities | (8,713 | ) | (30,888 | ) | ||||
Effect of foreign currency exchange rate changes on cash | 18 | (8 | ) | |||||
Net increase in cash | 1,019 | 135 | ||||||
Cash balance, beginning of period | 852 | 1,103 | ||||||
Cash balance, end of period | $ | 1,871 | $ | 1,238 | ||||
Supplemental Disclosure of Cash Flow Information: | ||||||||
Interest paid, during the period | $ | 5,817 | $ | 6,646 | ||||
Net income taxes paid, during the period | $ | 18,141 | $ | 5,679 | ||||
Dividends accrued during the period, not yet paid | $ | 6,214 | $ | 6,135 | ||||
Rental equipment acquisitions, not yet paid | $ | 6,359 | $ | 3,935 | ||||
MCGRATH RENTCORP | ||||||||||||||||||||
BUSINESS SEGMENT DATA (unaudited) | ||||||||||||||||||||
Three months ended June 30, 2017 | ||||||||||||||||||||
(dollar amounts in thousands) | Mobile Modular |
TRS- RenTelco |
Adler Tanks | Enviroplex | Consolidated | |||||||||||||||
Revenues | ||||||||||||||||||||
Rental | $ | 35,030 | $ | 19,805 | $ | 15,118 | $ | — | $ | 69,953 | ||||||||||
Rental related services | 11,966 | 654 | 6,176 | — | 18,796 | |||||||||||||||
Rental operations | 46,996 | 20,459 | 21,294 | — | 88,749 | |||||||||||||||
Sales | 9,504 | 5,605 | 926 | 4,152 | 20,187 | |||||||||||||||
Other | 138 | 475 | 33 | — | 646 | |||||||||||||||
Total revenues | 56,638 | 26,539 | 22,253 | 4,152 | 109,582 | |||||||||||||||
Costs and Expenses | ||||||||||||||||||||
Direct costs of rental operations: | ||||||||||||||||||||
Depreciation | 5,333 | 7,980 | 3,929 | — | 17,242 | |||||||||||||||
Rental related services | 8,930 | 657 | 4,725 | — | 14,312 | |||||||||||||||
Other | 10,247 | 3,272 | 2,520 | — | 16,039 | |||||||||||||||
Total direct costs of rental operations | 24,510 | 11,909 | 11,174 | — | 47,593 | |||||||||||||||
Costs of sales | 6,994 | 2,176 | 802 | 2,806 | 12,778 | |||||||||||||||
Total costs of revenues | 31,504 | 14,085 | 11,976 | 2,806 | 60,371 | |||||||||||||||
Gross Profit (Loss) | ||||||||||||||||||||
Rental | 19,451 | 8,553 | 8,669 | — | 36,673 | |||||||||||||||
Rental related services | 3,036 | (3 | ) | 1,450 | — | 4,483 | ||||||||||||||
Rental operations | 22,487 | 8,550 | 10,119 | — | 41,156 | |||||||||||||||
Sales | 2,509 | 3,429 | 125 | 1,346 | 7,409 | |||||||||||||||
Other | 138 | 475 | 33 | — | 646 | |||||||||||||||
Total gross profit | 25,134 | 12,454 | 10,277 | 1,346 | 49,211 | |||||||||||||||
Selling and administrative expenses | 13,817 | 5,330 | 7,261 | 957 | 27,365 | |||||||||||||||
Income from operations | $ | 11,317 | $ | 7,124 | $ | 3,016 | $ | 389 | 21,846 | |||||||||||
Interest expense | (2,949 | ) | ||||||||||||||||||
Foreign currency exchange gain | 11 | |||||||||||||||||||
Provision for income taxes | (7,447 | ) | ||||||||||||||||||
Net income | $ | 11,461 | ||||||||||||||||||
Other Information | ||||||||||||||||||||
Average rental equipment 1 | $ | 746,358 | $ | 248,117 | $ | 307,263 | ||||||||||||||
Average monthly total yield 2 | 1.56 | % | 2.66 | % | 1.64 | % | ||||||||||||||
Average utilization 3 | 76.5 | % | 62.4 | % | 54.4 | % | ||||||||||||||
Average monthly rental rate 4 | 2.05 | % | 4.27 | % | 3.01 | % | ||||||||||||||
- 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, 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 | 9,024 | 629 | 5,024 | — | 14,677 | ||||||||||||||||
Other | 10,536 | 3,337 | 2,147 | — | 16,020 | ||||||||||||||||
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 | 15,881 | 7,933 | 8,682 | — | 32,496 | ||||||||||||||||
Rental related services | 3,108 | 88 | 1,442 | — | 4,638 | ||||||||||||||||
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) | ||||||||||||||||||||
Six months ended June 30, 2017 | ||||||||||||||||||||
(dollar amounts in thousands) | Mobile Modular |
TRS- RenTelco |
Adler Tanks | Enviroplex | Consolidated | |||||||||||||||
Revenues | ||||||||||||||||||||
Rental | $ | 68,684 | $ | 39,551 | $ | 29,696 | $ | — | $ | 137,931 | ||||||||||
Rental related services | 23,554 | 1,312 | 11,865 | — | 36,731 | |||||||||||||||
Rental operations | 92,238 | 40,863 | 41,561 | — | 174,662 | |||||||||||||||
Sales | 12,468 | 9,988 | 1,115 | 4,911 | 28,482 | |||||||||||||||
Other | 235 | 1,002 | 38 | — | 1,275 | |||||||||||||||
Total revenues | 104,941 | 51,853 | 42,714 | 4,911 | 204,419 | |||||||||||||||
Costs and Expenses | ||||||||||||||||||||
Direct costs of rental operations: | ||||||||||||||||||||
Depreciation | 10,666 | 16,071 | 7,884 | — | 34,621 | |||||||||||||||
Rental related services | 17,727 | 1,254 | 9,164 | — | 28,145 | |||||||||||||||
Other | 19,894 | 6,605 | 4,899 | — | 31,398 | |||||||||||||||
Total direct costs of rental operations | 48,287 | 23,930 | 21,947 | — | 94,164 | |||||||||||||||
Costs of sales | 9,076 | 4,076 | 935 | 3,287 | 17,374 | |||||||||||||||
Total costs of revenues | 57,363 | 28,006 | 22,882 | 3,287 | 111,538 | |||||||||||||||
Gross Profit | ||||||||||||||||||||
Rental | 38,125 | 16,875 | 16,913 | — | 71,913 | |||||||||||||||
Rental related services | 5,827 | 58 | 2,700 | — | 8,585 | |||||||||||||||
Rental operations | 43,952 | 16,933 | 19,613 | — | 80,498 | |||||||||||||||
Sales | 3,391 | 5,912 | 181 | 1,624 | 11,108 | |||||||||||||||
Other | 235 | 1,002 | 38 | — | 1,275 | |||||||||||||||
Total gross profit | 47,578 | 23,847 | 19,832 | 1,624 | 92,881 | |||||||||||||||
Selling and administrative expenses | 27,617 | 11,019 | 14,528 | 2,049 | 55,213 | |||||||||||||||
Income (loss) from operations | $ | 19,961 | $ | 12,828 | $ | 5,304 | $ | (425 | ) | 37,668 | ||||||||||
Interest expense | (5,738 | ) | ||||||||||||||||||
Foreign currency exchange gain | 237 | |||||||||||||||||||
Provision for income taxes | (12,733 | ) | ||||||||||||||||||
Net income | $ | 19,434 | ||||||||||||||||||
Other Information | ||||||||||||||||||||
Average rental equipment 1 | $ | 745,508 | $ | 247,099 | $ | 307,048 | ||||||||||||||
Average monthly total yield 2 | 1.54 | % | 2.67 | % | 1.61 | % | ||||||||||||||
Average utilization 3 | 76.7 | % | 62.3 | % | 53.4 | % | ||||||||||||||
Average monthly rental rate 4 | 2.00 | % | 4.28 | % | 3.02 | % | ||||||||||||||
- 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 | 17,559 | 1,265 | 9,578 | — | 28,402 | ||||||||||||||||
Other | 19,552 | 6,976 | 4,774 | — | 31,302 | ||||||||||||||||
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 | 32,894 | 15,834 | 16,478 | — | 65,206 | ||||||||||||||||
Rental related services | 5,778 | 236 | 2,490 | — | 8,504 | ||||||||||||||||
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 gain | 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.
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, |
|||||||||||||||||||||
2017 |
2016 | 2017 | 2016 | 2017 | 2016 | |||||||||||||||||||
Net income | $ | 11,461 | $ | 9,079 | $ | 19,434 | $ | 15,645 | $ | 42,040 | $ | 40,779 | ||||||||||||
Provision for income taxes | 7,447 | 5,927 | 12,733 | 10,214 | 31,199 | 26,108 | ||||||||||||||||||
Interest | 2,949 | 2,990 | 5,738 | 6,546 | 11,399 | 11,900 | ||||||||||||||||||
Depreciation and amortization | 19,348 | 20,557 | 38,752 | 41,417 | 78,514 | 83,526 | ||||||||||||||||||
EBITDA | 41,205 | 38,553 | 76,657 | 73,822 | 163,152 | 162,313 | ||||||||||||||||||
Share-based compensation | 732 | 730 | 1,538 | 1,586 | 3,043 | 3,032 | ||||||||||||||||||
Adjusted EBITDA 1 | $ | 41,937 | $ | 39,283 | $ | 78,195 | $ | 75,408 | $ | 166,195 | $ | 165,345 | ||||||||||||
Adjusted EBITDA margin 2 | 38 | % | 38 | % | 38 | % | 38 | % | 38 | % | 40 | % | ||||||||||||
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, |
|||||||||||||||||||||
2017 |
2016 |
2017 | 2016 |
2017 | 2016 | |||||||||||||||||||
Adjusted EBITDA 1 | $ | 41,937 | $ | 39,283 | $ | 78,195 | $ | 75,408 | $ | 166,195 | $ | 165,345 | ||||||||||||
Interest paid | (3,397 | ) | (3,660 | ) | (5,817 | ) | (6,646 | ) | (11,607 | ) | (11,791 | ) | ||||||||||||
Net income taxes paid | (12,576 | ) | (4,973 | ) | (18,141 | ) | (5,679 | ) | (28,017 | ) | (6,687 | ) | ||||||||||||
Gain on sale of used rental equipment | (4,971 | ) | (3,316 | ) | (7,914 | ) | (6,282 | ) | (15,371 | ) | (12,619 | ) | ||||||||||||
Foreign currency exchange loss (gain) | (11 | ) | 77 | (237 | ) | (74 | ) | (42 | ) | 161 | ||||||||||||||
Amortization of debt financing cost | 12 | 13 | 25 | 26 | 51 | 51 | ||||||||||||||||||
Change in certain assets and liabilities: | ||||||||||||||||||||||||
Accounts receivable, net | (3,987 | ) | (3,977 | ) | 338 | (597 | ) | (925 | ) | (2,140 | ) | |||||||||||||
Income taxes receivable | — | — | — | 11,000 | — | — | ||||||||||||||||||
Prepaid expenses and other assets | (7,303 | ) | (4,812 | ) | (8,839 | ) | (2,863 | ) | (4,027 | ) | 2,066 | |||||||||||||
Accounts payable and other liabilities | 11,218 | 13,451 | 6,754 | 6,031 | 7,943 | 9,515 | ||||||||||||||||||
Deferred income | 2,646 | 1,525 | 5,034 | 2,061 | 3,509 | 8,623 | ||||||||||||||||||
Net cash provided by operating activities | $ | 23,568 | $ | 33,611 | $ | 49,398 | $ | 72,385 | $ | 117,709 | $ | 152,524 | ||||||||||||
- 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 EVP & Chief Financial Officer 925-606-9200