LIVERMORE, Calif.--(BUSINESS WIRE)--Aug. 3, 2021-- McGrath RentCorp (NASDAQ: MGRC) (the “Company”), a diversified business-to-business rental company, today announced total revenues for the quarter ended June 30, 2021 of $146.4 million, an increase of 6%, compared to the second quarter of 2020. The Company reported net income of $20.6 million, or $0.84 per diluted share, for the second quarter of 2021, compared to net income of $22.5 million, or $0.92 per diluted share, for the second quarter of 2020.

SECOND QUARTER 2021 COMPANY HIGHLIGHTS:

• Rental revenues increased 10% year-over-year to $94.6 million.
• Total revenues increased 6% year-over-year to $146.4 million.
• Excluding $2.6 million Design Space and Kitchens To Go transaction related costs and amortization of newly acquired intangible assets, net income for the second quarter was $22.5 million, or $0.92 per share, which was comparable to second quarter of 2020.
• Adjusted EBITDA¹ increased $0.4 million to $58.5 million.
• Dividend rate increased 4% year-over-year to $0.435 per share for the second quarter of 2021. On an annualized basis, this dividend represents a 2.2% yield on the August 2, 2021 close price of $78.90 per share.
• The Company raised full year 2021 guidance for total revenue to $610 million to $640 million and for adjusted EBITDA to $245 million to $260 million.

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

“Our second quarter results reflect improved end market conditions in each of our three business segments. Companywide rental revenues increased 10% year over year. Modular rental revenues grew 14%, with just over half the growth attributable to our Design Space and Kitchens To Go acquisitions during the quarter. Rental revenues at TRS and Adler grew 7% and 4% respectively. Sequential rental revenue growth in each segment reflected improving business conditions as we enter seasonally busier months of the year.

Our teams have been busy working through the integration of Design Space and Kitchens To Go, acquired during the second quarter. I am grateful for their exceptional support and very pleased with their progress. I am excited about the long-term potential from both of these acquisitions. Just in the first few months we have begun to realize opportunities from our combined selling resources and we expect many more opportunities to come.

While business activity levels have increased, we have also seen some impact from current economic realities in the new equipment sales portion of our modular business. Supply chain delays, labor shortages and higher costs for materials and labor are starting to extend project timelines and cause some new sales to push out to later in the year, or into next year. Consequently, our outlook for new modular equipment sales in 2021, while still higher than 2020, is not as strong as it was a few months ago.

The second half of the year is typically the most substantial contributor to our annual results. While the potential for COVID-19 related disruption remains, we will be fully focused on solid execution to make the most of the improved business conditions that we have recently seen.”

DIVISION HIGHLIGHTS:

All comparisons presented below are for the quarter ended June 30, 2021 to the quarter ended June 30, 2020 unless otherwise indicated.

MOBILE MODULAR

For the second quarter of 2021, the Company’s Mobile Modular division reported income from operations of $18.2 million, a decrease of $2.4 million, or 12%. Rental revenues increased 14% to $53.2 million, depreciation expense increased 23% to $7.1 million and other direct costs increased 28% to $15.9 million, which resulted in an increase in gross profit on rental revenues of 6% to $30.3 million. The rental revenue increase was due in part to approximately $4.0 million revenues earned during the quarter from new Design Space and Kitchens To Go customers acquired during the quarter. Rental related services revenues increased 12% to $16.2 million, primarily due to increased delivery and return delivery revenues at Portable Storage and higher amortization of modular building delivery and return delivery and dismantle revenues, with associated gross profit increasing 7% to $4.4 million. Sales revenues decreased 3% to $14.8 million, primarily due to lower new equipment sales. Gross margin on sales was 39% compared to 29% in 2020, resulting in a 29% increase in gross profit on sales revenues to $5.8 million. Selling and administrative expenses increased 34% to $22.6 million, primarily due to increased employee salaries and benefit costs totaling $2.0 million, mostly due to the addition of Design Space and Kitchens To Go employees during the quarter, $1.7 million higher amortization of intangible assets due to the Design Space and Kitchens To Go acquisitions and $0.9 million acquisition related transaction costs in 2021.

TRS-RENTELCO

For the second quarter of 2021, the Company’s TRS-RenTelco division reported income from operations of $8.5 million, an increase of $0.2 million, or 3%. Rental revenues increased 7% to $27.9 million, depreciation expense increased 1% to $11.9 million and other direct costs increased 32% to $4.7 million, which resulted in a 5% increase in gross profit on rental revenues to $11.2 million. The rental revenue increase was primarily due to increased demand for general purpose equipment compared to the prior year. Sales revenues decreased 20% to $4.8 million. Gross margin on sales was 62% in 2021 compared to 49% in 2020, resulting in a 3% increase in gross profit on sales revenues to $3.0 million. Selling and administrative expenses increased 3% to $6.1 million.

ADLER TANKS

For the second quarter of 2021, the Company’s Adler Tanks division reported income from operations of $1.7 million, which was comparable to the prior year. Rental revenues increased 4% to $13.5 million, depreciation expense increased 2% to $4.2 million and other direct costs increased 19% to $2.7 million, which resulted in a comparable gross profit on rental revenues to $6.7 million in 2021 and 2020. Rental related services revenues increased 8% to $5.8 million, with gross profit on rental related services decreasing $0.3 million, or 21%, to $1.0 million. Selling and administrative expenses decreased 2% to $6.3 million.

FINANCIAL OUTLOOK:

Based upon the Company’s year-to-date results, current outlook for the remainder of the year, and the previously announced acquisition of Design Space, the Company is raising its financial outlook.

For the full-year 2021, the Company expects:

				Previous		Current
●		Total revenue:		$570 million to $610 million		$610 million to $640 million
●		Adjusted EBITDA:		$232 million to $247 million		$245 million to $260 million
●		Gross rental equipment capital expenditures:		$90 million to $110 million		$100 million to $120 million

1.		Adjusted EBITDA is defined as net income before interest expense, provision for income taxes, depreciation, amortization, non-cash impairment costs and share-based compensation. A reconciliation of actual net income to Adjusted EBITDA and Adjusted EBITDA to net cash provided by operating activities can be found at the end of this release.
2.		Information reconciling forward-looking Adjusted EBITDA to the comparable GAAP financial measures is unavailable to the Company without unreasonable effort because certain items required for such reconciliations are outside of the Company’s control and/or cannot be reasonably predicted, such as the provision for income taxes. Therefore, no reconciliation to the most comparable GAAP measures is provided. The Company provides Adjusted EBITDA guidance because it believes that Adjusted EBITDA, when viewed with the Company’s results under GAAP, provides useful information for the reasons noted in the reconciliation of actual Adjusted EBITDA to the most directly comparable GAAP measures at the end of this release.

ABOUT MCGRATH RENTCORP:

Founded in 1979, McGrath RentCorp (Nasdaq: MGRC) is a diversified business-to-business rental company providing modular buildings, electronic test equipment, portable storage and tank containment solutions across the United States and other select North American regions. The Company’s rental operations consist of four divisions: Mobile Modular rents and sells modular buildings to fulfill customers’ temporary and permanent classroom and office space needs; TRS-RenTelco rents and sells electronic test equipment; Adler Tank Rentals rents and sells containment solutions for hazardous and nonhazardous liquids and solids; and Mobile Modular Portable Storage provides portable storage rental solutions. For more information on McGrath RentCorp and its operating units, please visit our websites:

Corporate – www.mgrc.com
Modular Buildings – www.mobilemodular.com
Electronic Test Equipment – www.trsrentelco.com
Tanks and Boxes – www.adlertankrentals.com
Portable Storage – www.mobilemodularcontainers.com
School Facilities Manufacturing – www.enviroplex.com

You should read this press release in conjunction with the financial statements and notes thereto included in the Company’s latest Forms 10-K, 10-Q and other SEC filings. You can visit the Company’s web site at www.mgrc.com to access information on McGrath RentCorp, including the latest Forms 10-K, 10-Q and other SEC filings.

CONFERENCE CALL NOTE:

As previously announced in its press release of July 7, 2021, McGrath RentCorp will host a conference call at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) on August 3, 2021 to discuss the second quarter 2021 results. To participate in the teleconference, dial 1-844-707-0666 (in the U.S.), or 1-703-639-1220 (outside the U.S.), or to listen only, access the simultaneous webcast at the investor relations section of the Company’s website at https://investors.mgrc.com/. A replay will be available for 7 days following the call by dialing 1-855-859-2056 (in the U.S.), or 1-404-537-3406 (outside the U.S.). The pass code for the conference call replay is 5573645. In addition, a live audio webcast and replay of the call may be found in the investor relations section of the Company’s website at https://investors.mgrc.com/events-and-presentations.

FORWARD-LOOKING STATEMENTS:

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, regarding McGrath RentCorp’s expectations, strategies, prospects or targets are forward looking statements. These forward-looking statements also can be identified by the use of forward-looking terminology such as “anticipates,” “believes,” “continues,” “could,” “estimates,” “expects,” “intends,” “may,” “plan,” “predict,” “project,” or “will,” or the negative of these terms or other comparable terminology. In particular, Mr. Hanna’s statements about being excited about the long-term potential from both of the Design Space and Kitchens To Go acquisitions, the expectation of the realization of more opportunities from the combined selling resources, the impact supply chain delays, labor shortages and higher costs of materials and labor are having on project timelines and the Company’s outlook for new equipment sales in 2021, the potential for COVID-19 related disruption and keeping fully focused on solid execution and improved business conditions, as well as the statements regarding the full year 2021 in the “Financial Outlook” section, are forward-looking.

These forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties that could cause our actual results to differ materially from those projected including: the duration of the COVID-19 pandemic and its economic impact, the extent and length of the shelter-in and other restrictions associated with COVID-19 pandemic, the health of the education and commercial markets in our modular building division; the activity levels in the general purpose and communications test equipment markets at TRS-RenTelco; the ability to obtain the synergies expected from the Design Space and Kitchens To Go acquisition, the utilization levels and rental rates of our Adler Tanks liquid and solid containment tank and box rental assets; continued execution of our performance improvement initiatives; and our ability to effectively manage our rental assets, as well as the factors disclosed under “Risk Factors” in the Company’s Form 10-K and other SEC filings.

Forward-looking statements are made only as of the date hereof. Except as otherwise required by law, we assume no obligation to update any of the forward-looking statements contained in this press release.

MCGRATH RENTCORP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
		Three Months Ended June 30,								Six Months Ended June 30,
(in thousands, except per share amounts)		2021				2020				2021				2020
Revenues
Rental		$	94,581			$	85,629			$	180,668			$	175,135
Rental related services			22,688				20,475				42,357				44,986
Rental operations			117,269				106,104				223,025				220,121
Sales			28,256				30,669				42,867				45,035
Other			910				900				1,738				1,970
Total revenues			146,435				137,673				267,630				267,126
Costs and Expenses
Direct costs of rental operations:
Depreciation of rental equipment			23,159				21,583				44,414				43,221
Rental related services			17,276				14,894				31,880				33,157
Other			23,278				18,165				42,985				37,618
Total direct costs of rental operations			63,713				54,642				119,279				113,996
Costs of sales			16,855				19,799				25,403				28,242
Total costs of revenues			80,568				74,441				144,682				142,238
Gross profit			65,867				63,232				122,948				124,888
Selling and administrative expenses			36,261				30,540				69,398				62,494
Income from operations			29,606				32,692				53,550				62,394
Other expense:
Interest expense			(2,257	)			(2,184	)			(4,040	)			(4,836	)
Foreign currency exchange (loss) gain			(2	)			117				(57	)			(319	)
Income before provision for income taxes			27,347				30,625				49,453				57,239
Provision for income taxes			6,739				8,076				11,447				14,531
Net income		$	20,608			$	22,549			$	38,006			$	42,708
Earnings per share:
Basic		$	0.85			$	0.93			$	1.57			$	1.76
Diluted		$	0.84			$	0.92			$	1.55			$	1.74
Shares used in per share calculation:
Basic			24,229				24,121				24,191				24,207
Diluted			24,494				24,471				24,505				24,612
Cash dividends declared per share		$	0.435			$	0.420			$	0.870			$	0.840

MCGRATH RENTCORP
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
		June 30,				December 31,
(in thousands)		2021				2020
Assets
Cash		$	2,412			$	1,238
Accounts receivable, net of allowance for doubtful accounts of $2,225 in 2021 and $2,100 in 2020			140,909				123,316
Rental equipment, at cost:
Relocatable modular buildings			1,019,697				882,115
Electronic test equipment			360,720				333,020
Liquid and solid containment tanks and boxes			313,677				315,706
			1,694,094				1,530,841
Less accumulated depreciation			(621,039	)			(592,725	)
Rental equipment, net			1,073,055				938,116
Property, plant and equipment, net			138,590				136,210
Prepaid expenses and other assets			57,499				41,549
Intangible assets, net			51,169				7,118
Goodwill			132,393				28,197
Total assets		$	1,596,027			$	1,275,744
Liabilities and Shareholders' Equity
Liabilities:
Notes payable		$	472,696			$	222,754
Accounts payable and accrued liabilities			144,901				108,334
Deferred income			56,964				45,975
Deferred income taxes, net			223,345				216,077
Total liabilities			897,906				593,140
Shareholders’ equity:
Common stock, no par value - Authorized 40,000 shares
Issued and outstanding - 24,245 shares as of June 30, 2021 and 24,128 shares as of December 31, 2020			105,058				106,289
Retained earnings			593,132				576,419
Accumulated other comprehensive loss			(69	)			(104	)
Total shareholders’ equity			698,121				682,604
Total liabilities and shareholders’ equity		$	1,596,027			$	1,275,744

MCGRATH RENTCORP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
		Six Months Ended June 30,
(in thousands)		2021				2020
Cash Flows from Operating Activities:
Net income		$	38,006			$	42,708
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			50,559				47,663
Provision for doubtful accounts			138				833
Share-based compensation			3,597				3,224
Gain on sale of used rental equipment			(11,870	)			(9,602	)
Foreign currency exchange loss			57				319
Amortization of debt issuance costs			6				5
Change in:
Accounts receivable			(5,494	)			1,326
Prepaid expenses and other assets			(9,385	)			(1,641	)
Accounts payable and accrued liabilities			17,642				6,389
Deferred income			7,458				5,815
Deferred income taxes			7,268				483
Net cash provided by operating activities			97,982				97,522
Cash Flows from Investing Activities:
Purchases of rental equipment			(58,902	)			(57,564	)
Purchases of property, plant and equipment			(2,272	)			(6,893	)
Cash paid for acquisition of businesses			(284,341	)			—
Proceeds from sales of used rental equipment			24,674				21,921
Net cash used in investing activities			(320,841	)			(42,536	)
Cash Flows from Financing Activities:
Net borrowing (repayment) under bank lines of credit			189,983				(21,288	)
Borrowing under private placement			60,000				—
Repurchase of common stock			—				(13,501	)
Taxes paid related to net share settlement of stock awards			(4,828	)			(2,340	)
Payment of dividends			(21,089	)			(19,526	)
Net cash provided by (used in) financing activities			224,066				(56,655	)
Effect of foreign currency exchange rate changes on cash			(33	)			21
Net increase (decrease) in cash			1,174				(1,648	)
Cash balance, beginning of period			1,238				2,342
Cash balance, end of period		$	2,412			$	694
Supplemental Disclosure of Cash Flow Information:
Interest paid, during the period		$	3,987			$	5,031
Net income taxes paid, during the period		$	6,990			$	2,153
Dividends accrued during the period, not yet paid		$	9,918			$	10,255
Rental equipment acquisitions, not yet paid		$	8,502			$	6,654

MCGRATH RENTCORP
BUSINESS SEGMENT DATA (unaudited)
Three months ended June 30, 2021
(dollar amounts in thousands)		Mobile Modular				TRS- RenTelco				Adler Tanks				Enviroplex				Consolidated
Revenues
Rental		$	53,238			$	27,860			$	13,483			$	—			$	94,581
Rental related services			16,207				710				5,771				—				22,688
Rental operations			69,445				28,570				19,254				—				117,269
Sales			14,784				4,757				593				8,122				28,256
Other			343				456				111				—				910
Total revenues			84,572				33,783				19,958				8,122				146,435
Costs and Expenses
Direct costs of rental operations:
Depreciation			7,074				11,916				4,169				—				23,159
Rental related services			11,804				745				4,727				—				17,276
Other			15,901				4,718				2,659				—				23,278
Total direct costs of rental operations			34,779				17,379				11,555				—				63,713
Costs of sales			9,034				1,792				427				5,602				16,855
Total costs of revenues			43,813				19,171				11,982				5,602				80,568
Gross Profit
Rental			30,264				11,225				6,655				—				48,144
Rental related services			4,401				(33	)			1,044				—				5,412
Rental operations			34,665				11,192				7,699				—				53,556
Sales			5,751				2,964				166				2,520				11,401
Other			343				456				111				—				910
Total gross profit			40,759				14,612				7,976				2,520				65,867
Selling and administrative expenses			22,602				6,073				6,253				1,333				36,261
Income from operations		$	18,157			$	8,539			$	1,723			$	1,187				29,606
Interest expense																			(2,257	)
Foreign currency exchange gain																			(2	)
Provision for income taxes																			(6,739	)
Net income																		$	20,608
Other Information
Average rental equipment 1		$	906,653			$	349,480			$	313,108
Average monthly total yield 2			1.96	%			2.66	%			1.44	%
Average utilization 3			75.5	%			67.7	%			44.0	%
Average monthly rental rate 4			2.59	%			3.93	%			3.27	%

1.		Average rental equipment represents the cost of rental equipment, excluding accessory equipment. For Mobile Modular and Adler Tanks, Average rental equipment also excludes new equipment inventory.
2.		Average monthly total yield is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment for the period.
3.		Average utilization is calculated by dividing the average month end costs of rental equipment on rent by the average month end total costs of rental equipment.
4.		Average monthly rental rate is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment on rent for the period.

MCGRATH RENTCORP
BUSINESS SEGMENT DATA (unaudited)
Three months ended June 30, 2020
(dollar amounts in thousands)		Mobile Modular				TRS- RenTelco				Adler Tanks				Enviroplex				Consolidated
Revenues
Rental		$	46,628			$	26,012			$	12,989			$	—			$	85,629
Rental related services			14,463				670				5,342				—				20,475
Rental operations			61,091				26,682				18,331				—				106,104
Sales			15,316				5,922				232				9,199				30,669
Other			355				475				70				—				900
Total revenues			76,762				33,079				18,633				9,199				137,673
Costs and Expenses
Direct costs of rental operations:
Depreciation			5,737				11,750				4,096				—				21,583
Rental related services			10,362				517				4,015				—				14,894
Other			12,376				3,562				2,227				—				18,165
Total direct costs of rental operations			28,475				15,829				10,338				—				54,642
Costs of sales			10,845				3,049				228				5,677				19,799
Total costs of revenues			39,320				18,878				10,566				5,677				74,441
Gross Profit
Rental			28,514				10,700				6,666				—				45,880
Rental related services			4,101				153				1,327				—				5,581
Rental operations			32,615				10,853				7,993				—				51,461
Sales			4,471				2,873				4				3,522				10,870
Other			356				475				70				—				901
Total gross profit			37,442				14,201				8,067				3,522				63,232
Selling and administrative expenses			16,857				5,875				6,353				1,455				30,540
Income from operations		$	20,585			$	8,326			$	1,714			$	2,067				32,692
Interest expense																			(2,184	)
Foreign currency exchange gain																			117
Provision for income taxes																			(8,076	)
Net income																		$	22,549
Other Information
Average rental equipment 1		$	822,743			$	338,919			$	314,780
Average monthly total yield 2			1.89	%			2.56	%			1.38	%
Average utilization 3			77.7	%			63.9	%			44.3	%
Average monthly rental rate 4			2.43	%			4.00	%			3.10	%

1.		Average rental equipment represents the cost of rental equipment, excluding accessory equipment. For Mobile Modular and Adler Tanks, Average rental equipment also excludes new equipment inventory.
2.		Average monthly total yield is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment for the period.
3.		Average utilization is calculated by dividing the average month end costs of rental equipment on rent by the average month end total costs of rental equipment.
4.		Average monthly rental rate is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment on rent for the period.

MCGRATH RENTCORP
BUSINESS SEGMENT DATA (unaudited)
Six months ended June 30, 2021
(dollar amounts in thousands)		Mobile Modular				TRS- RenTelco				Adler Tanks				Enviroplex				Consolidated
Revenues
Rental		$	99,895			$	55,136			$	25,637			$	—			$	180,668
Rental related services			30,258				1,450				10,649				—				42,357
Rental operations			130,153				56,586				36,286				—				223,025
Sales			22,404				9,906				1,201				9,356				42,867
Other			663				894				181				—				1,738
Total revenues			153,220				67,386				37,668				9,356				267,630
Costs and Expenses
Direct costs of rental operations:
Depreciation			12,893				23,278				8,243				—				44,414
Rental related services			21,876				1,398				8,606				—				31,880
Other			28,776				9,252				4,957				—				42,985
Total direct costs of rental operations			63,545				33,928				21,806				—				119,279
Costs of sales			13,982				4,093				843				6,485				25,403
Total costs of revenues			77,527				38,021				22,649				6,485				144,682
Gross Profit
Rental			58,227				22,605				12,437				—				93,269
Rental related services			8,380				54				2,043				—				10,477
Rental operations			66,607				22,659				14,480				—				103,746
Sales			8,423				5,812				358				2,871				17,464
Other			663				894				181				—				1,738
Total gross profit			75,693				29,365				15,019				2,871				122,948
Selling and administrative expenses			41,839				12,371				12,520				2,668				69,398
Income from operations		$	33,854			$	16,994			$	2,499			$	203				53,550
Interest expense																			(4,040	)
Foreign currency exchange loss																			(57	)
Provision for income taxes																			(11,447	)
Net income																		$	38,006
Other Information
Average rental equipment 1		$	876,529			$	342,526			$	313,498
Average monthly total yield 2			1.90	%			2.68	%			1.36	%
Average utilization 3			75.7	%			67.7	%			42.1	%
Average monthly rental rate 4			2.44	%			3.96	%			3.24	%

1.		Average rental equipment represents the cost of rental equipment, excluding accessory equipment. For Mobile Modular and Adler Tanks, Average rental equipment also excludes new equipment inventory.
2.		Average monthly total yield is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment for the period.
3.		Average utilization is calculated by dividing the average month end costs of rental equipment on rent by the average month end total costs of rental equipment.
4.		Average monthly rental rate is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment on rent for the period.

MCGRATH RENTCORP
BUSINESS SEGMENT DATA (unaudited)
Six months ended June 30, 2020
(dollar amounts in thousands)		Mobile Modular				TRS- RenTelco				Adler Tanks				Enviroplex				Consolidated
Revenues
Rental		$	94,038			$	53,548			$	27,549			$	—			$	175,135
Rental related services			32,607				1,496				10,883				—				44,986
Rental operations			126,645				55,044				38,432				—				220,121
Sales			22,572				11,031				730				10,702				45,035
Other			743				1,067				160				—				1,970
Total revenues			149,960				67,142				39,322				10,702				267,126
Costs and Expenses
Direct costs of rental operations:
Depreciation			11,406				23,582				8,233				—				43,221
Rental related services			23,712				1,163				8,282				—				33,157
Other			24,993				7,942				4,683				—				37,618
Total direct costs of rental operations			60,111				32,687				21,198				—				113,996
Costs of sales			15,548				5,497				548				6,649				28,242
Total costs of revenues			75,659				38,184				21,746				6,649				142,238
Gross Profit
Rental			57,638				22,024				14,633				—				94,295
Rental related services			8,895				333				2,601				—				11,829
Rental operations			66,533				22,357				17,234				—				106,124
Sales			7,024				5,534				182				4,053				16,793
Other			744				1,067				160				—				1,971
Total gross profit			74,301				28,958				17,576				4,053				124,888
Selling and administrative expenses			34,275				12,236				13,177				2,806				62,494
Income from operations		$	40,026			$	16,722			$	4,399			$	1,247				62,394
Interest expense																			(4,836	)
Foreign currency exchange gain																			(319	)
Provision for income taxes																			(14,531	)
Net income																		$	42,708
Other Information
Average rental equipment 1		$	819,212			$	338,066			$	314,823
Average monthly total yield 2			1.90	%			2.64	%			1.46	%
Average utilization 3			78.2	%			64.7	%			45.9	%
Average monthly rental rate 4			2.45	%			4.08	%			3.18	%

1.		Average rental equipment represents the cost of rental equipment, excluding accessory equipment. For Mobile Modular and Adler Tanks, Average rental equipment also excludes new equipment inventory.
2.		Average monthly total yield is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment for the period.
3.		Average utilization is calculated by dividing the average month end costs of rental equipment on rent by the average month end total costs of rental equipment.
4.		Average monthly rental rate is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment on rent for the period.

Reconciliation of Adjusted EBITDA to the most directly comparable GAAP measures

To supplement the Company’s financial data presented on a basis consistent with accounting principles generally accepted in the United States of America (“GAAP”), the Company presents “Adjusted EBITDA”, which is defined by the Company as net income before interest expense, provision for income taxes, depreciation, amortization and share-based compensation. The Company presents Adjusted EBITDA as a financial measure as management believes it provides useful information to investors regarding the Company’s liquidity and financial condition and because management, as well as the Company’s lenders, use this measure in evaluating the performance of the Company.

Management uses Adjusted EBITDA as a supplement to GAAP measures to further evaluate the Company’s period-to-period operating performance, compliance with financial covenants in the Company’s revolving lines of credit and senior notes and the Company’s ability to meet future capital expenditure and working capital requirements. Management believes the exclusion of non-cash charges, including share-based compensation, is useful in measuring the Company’s cash available for operations and performance of the Company. Because management finds Adjusted EBITDA useful, the Company believes its investors will also find Adjusted EBITDA useful in evaluating the Company’s performance.

Adjusted EBITDA should not be considered in isolation or as a substitute for net income, cash flows, or other consolidated income or cash flow data prepared in accordance with GAAP or as a measure of the Company’s profitability or liquidity. Adjusted EBITDA is not in accordance with or an alternative for GAAP, and may be different from non-GAAP measures used by other companies. Unlike EBITDA, which may be used by other companies or investors, Adjusted EBITDA does not include share-based compensation charges. The Company believes that Adjusted EBITDA is of limited use in that it does not reflect all of the amounts associated with the Company’s results of operations as determined in accordance with GAAP and does not accurately reflect real cash flow. In addition, other companies may not use Adjusted EBITDA or may use other non-GAAP measures, limiting the usefulness of Adjusted EBITDA for purposes of comparison. The Company’s presentation of Adjusted EBITDA should not be construed as an inference that the Company will not incur expenses that are the same as or similar to the adjustments in this presentation. Therefore, Adjusted EBITDA should only be used to evaluate the Company’s results of operations in conjunction with the corresponding GAAP measures. The Company compensates for the limitations of Adjusted EBITDA by relying upon GAAP results to gain a complete picture of the Company’s performance. Because Adjusted EBITDA is a non-GAAP financial measure as defined by the SEC, the Company includes in the tables below reconciliations of Adjusted EBITDA to the most directly comparable financial measures calculated and presented in accordance with GAAP.

Reconciliation of Net Income to Adjusted EBITDA
(dollar amounts in thousands)		Three Months Ended June 30,								Six Months Ended June 30,								Twelve Months Ended June 30,
		2021				2020				2021				2020				2021				2020
Net income		$	20,608			$	22,549			$	38,006			$	42,708			$	97,282			$	101,577
Provision for income taxes			6,739				8,076				11,447				14,531				26,976				34,571
Interest expense			2,257				2,184				4,040				4,836				7,991				10,921
Depreciation and amortization			27,099				23,801				50,559				47,663				97,539				94,052
EBITDA			56,703				56,610				104,052				109,738				229,788				241,121
Share-based compensation			1,820				1,501				3,597				3,224				5,922				6,370
Adjusted EBITDA 1		$	58,523			$	58,111			$	107,649			$	112,962			$	235,710			$	247,491
Adjusted EBITDA margin 2			40	%			42	%			40	%			42	%			41	%			42	%

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,
		2021				2020				2021				2020				2021				2020
Adjusted EBITDA 1		$	58,523			$	58,111			$	107,649			$	112,962			$	235,710			$	247,491
Interest paid			(2,362	)			(2,172	)			(3,987	)			(5,031	)			(8,006	)			(11,296	)
Income taxes paid, net of refunds received			(6,618	)			(1,790	)			(6,990	)			(2,153	)			(39,740	)			(13,508	)
Gain on sale of used rental equipment			(7,076	)			(4,814	)			(11,870	)			(9,602	)			(21,597	)			(21,743	)
Foreign currency exchange loss (gain)			2				(117	)			57				319				(340	)			321
Amortization of debt issuance costs			3				2				6				5				12				11
Change in certain assets and liabilities:
Accounts receivable, net			(6,464	)			(106	)			(5,356	)			2,159				(2,732	)			(4,149	)
Prepaid expenses and other assets			(9,291	)			(2,004	)			(9,385	)			(1,641	)			(3,937	)			6,075
Accounts payable and other liabilities			30,785				5,858				20,400				(5,311	)			28,940				(3,717	)
Deferred income			2,871				(1,128	)			7,458				5,815				(7,346	)			(5,956	)
Net cash provided by operating activities		$	60,373			$	51,840			$	97,982			$	97,522			$	180,964			$	193,529

1.		Adjusted EBITDA is defined as net income before interest expense, provision for income taxes, depreciation, amortization and share-based compensation.
2.		Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by total revenues for the period.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20210803005934/en/

Keith E. Pratt
EVP & Chief Financial Officer
925-606-9200

Source: McGrath RentCorp