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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
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CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 2, 2007
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McGRATH RENTCORP
(Exact name of registrant as specified in its Charter)
California
(State or other jurisdiction of incorporation)
0-13292 94-2579843
(Commission File Number) (I.R.S. Employee Identification No.)
5700 Las Positas Road, Livermore, CA 94551-7800
(Address of principal executive offices)
(925) 606-9200
(Registrant's Telephone Number, Including Area Code)
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Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
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1
Item 2.02 Results of Operations and Financial Condition.
On August 2, 2007, McGrath RentCorp (the "Company") announced via press
release the Company's results for its second quarter ended June 30, 2007. A copy
of the Company's press release is attached hereto as Exhibit 99.1. This Form 8-K
and the attached exhibit are provided under Items 2.02 and 9.01 of Form 8-K and
are furnished to, but not filed with, the Securities and Exchange Commission,
and shall not be incorporated by reference in any filing under the Securities
Act of 1934 or the Securities Exchange Act of 1934.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. Description
----------- -----------
99.1 Press Release of McGrath RentCorp, dated
August 2, 2007.
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
McGRATH RENTCORP
Dated: August 2, 2007 By: /s/ Keith E. Pratt
-----------------------
Keith E. Pratt
Vice President and
Chief Financial Officer
3
Exhibit 99.1
McGrath RentCorp Announces Results for Second Quarter 2007
EPS Increases 6% to $0.36 for the Quarter
Rental Revenues Increase 9%
LIVERMORE, Calif.--(BUSINESS WIRE)--Aug. 2, 2007--McGrath RentCorp
(NASDAQ:MGRC) today announced revenues for the quarter ended June 30, 2007, of
$67.4 million, an increase of 11%, compared to $60.7 million in the second
quarter 2006. The Company reported net income for the second quarter 2007 of
$9.1 million, or $0.36 per diluted share, compared to net income of $8.7
million, or $0.34 per diluted share, in the second quarter 2006. During the
second quarter 2006, the Company recorded a $0.9 million reduction to the
provision for income taxes, or $0.03 per diluted share, due to the reduction in
the Company's deferred tax liability as a result of a franchise tax law change
enacted by the state of Texas in May 2006.
For the second quarter of 2007, the Company's Mobile Modular division
posted a 14% increase in rental revenues to $24.7 million compared with $21.6
million in the second quarter 2006, with gross profit on rental revenues
increasing 29% to $15.3 million from $11.9 million in the second quarter 2006.
Sales revenues decreased $1.2 million from $7.3 million in the second quarter
2006 to $6.1 million, with comparable gross profit on sales of $1.8 million due
to higher gross margins on sales of 29.0% in the second quarter 2007 compared to
24.5% in the second quarter 2006. Total gross profit increased 21% from $16.2
million in the second quarter 2006 to $19.7 million in the second quarter 2007.
Selling and administrative expenses increased $0.8 million to $6.7 million in
the second quarter 2007. As a result, Mobile Modular's pre-tax income increased
32% from $8.3 million to $11.0 million in the second quarter 2007.
For the second quarter of 2007, the Company's TRS-RenTelco division posted
a 4% increase in rental revenues to $20.3 million from $19.6 million in the
second quarter of 2006, with gross profit on rental revenues decreasing 4% to
$7.9 million from $8.2 million in the second quarter 2006. The lower gross
profit on rental revenues was primarily due to 12% higher depreciation expense
and 6% lower average equipment utilization in 2007, resulting in a higher
depreciation as a percentage of rents of 47.9% in the second quarter 2007
compared to 44.4% in the second quarter 2006. Sales revenues increased $2.4
million from $3.2 million to $5.6 million in the second quarter 2007, with gross
profit on sales increasing $0.6 million to $1.7 million from $1.1 million in the
second quarter 2006. Selling and administrative expenses increased $1.1 million
to $5.3 million in the second quarter 2007. As a result, TRS-RenTelco's pre-tax
income decreased 18% from $4.7 million to $3.8 million in the second quarter
2007.
Dennis Kakures, President and CEO of McGrath RentCorp, made the following
comments regarding these results and future expectations:
"Our second quarter results reflect the continuing growth of our modulars
and electronics rental businesses.
"Mobile Modular's 14% increase in rental revenues over the second quarter
of last year is primarily related to classroom and commercial building shipments
in the second half of 2006. We should experience a full 12 months of rental
revenues in 2007 on a large number of these orders. Gross profit on rents
increasing 29% compared to a year ago was driven by the higher rental revenue
level and lower direct expenses within the quarter. The direct expenses in the
second quarter 2006 were impacted by higher field service costs and higher
material costs related to the mix of building modification and preparation work
performed during the quarter.
"Classroom rental opportunities and booking levels have been very favorable
thus far in 2007. In California, we are benefiting from strong demand to
modernize California's aging public school infrastructure and the passage of the
November 2006 statewide facilities bond measure to fund these projects. In
Florida, the popularity of our hybrid classroom product, class size reduction
and the phasing out of older model code portable classrooms continue to support
strong rental revenue growth. Keep in mind that the great majority of these
classroom rental orders will not ship and begin billing until the third quarter
of 2007. Second quarter ending utilization stood at 82.8%, up from 81.5% at the
end of the first quarter, and we would expect further improvement by the end of
the third quarter due to these school shipments. For the second quarter of 2007,
our commercial rental booking activity in the California and Texas markets was
generally strong, with some weakness in the residential developer sector. In
Florida, we are pleased with the volume of commercial opportunities we are
experiencing as we work to establish the Mobile Modular brand name in the
market.
"TRS-RenTelco's 4% increase in rental revenues quarter over quarter
reflects stable market conditions. Despite a healthy pipeline of opportunities,
we experienced slower than anticipated conversion to bookings, especially during
the later part of the quarter. However, we've had a favorable start to the third
quarter in new rental orders.
"TRS-RenTelco's pre-tax income for the second quarter was lower than last
year as a result of higher selling and administrative expenses, and higher
depreciation. We are more fully staffed than a year ago. Most of these positions
are sales and marketing related and should support rental revenue growth in the
quarters ahead. Depreciation expense increased due to our purchases over the
past 12 months of the latest technology test equipment to support growth and our
need to reduce our inventories of older technology equipment. We also saw our
average monthly rental rate during the quarter reduce to 4.99% compared to 5.09%
during the first quarter. This is mainly due to a greater mix of general purpose
test equipment that typically has lower rental rates, but longer lives, compared
to communications test equipment. Other factors contributing to the lower
average monthly rental rate were account penetration and competitive pressures,
and the phasing out of TRS acquired equipment at approximately 55% of list price
compared to new equipment purchases at approximately 90% of list price. We
expect profitability to improve in the second half of 2007 as we increase
utilization of newer technology equipment and continue to sell older generation
inventory."
SECOND QUARTER 2007 HIGHLIGHTS (AS COMPARED TO SECOND QUARTER 2006)
-- Rental revenues increased 9% to $45.0 million. Within rental revenues,
Mobile Modular increased 14% from $21.6 million to $24.7 million;
TRS-RenTelco increased 4% from $19.6 million to $20.3 million.
-- Sales revenues increased 12% to $13.2 million, resulting from higher
sales volume in TRS-RenTelco and Enviroplex partly offset by lower
sales volume in Mobile Modular. The higher sales volume and higher
gross margin percentage of 30.4% in 2007 compared to 27.3% in 2006,
resulted in a gross profit increase of $0.8 million. Sales revenues
and related gross margins can fluctuate from quarter to quarter
depending on customer requirements, equipment availability and
funding.
-- Depreciation of rental equipment increased 13% to $12.7 million, with
Mobile Modular increasing 15% to $3.0 million from $2.6 million in
2006, and TRS-RenTelco increasing 12% to $9.7 million from $8.7
million in 2006.
-- Provision for income taxes was based on an effective rate of 39.0% in
2007 compared to 32.1% in 2006. The 2006 provision for income taxes
was reduced $0.9 million during the second quarter to record the
impact to the Company's deferred tax liability from a franchise tax
law change enacted by the state of Texas in May 2006. Excluding the
impact of the Texas law change, the second quarter 2006 provision for
income taxes was based on an effective tax rate of 39.0%.
-- Debt increased $11.8 million during the quarter to $186.0 million,
with the Company's total liabilities to equity ratio decreasing from
1.51 to 1 at March 31, 2007 to 1.49 to 1 as of June 30, 2007. As of
June 30, 2007, the Company, under its lines of credit, had capacity to
borrow an additional $57.0 million.
-- Dividend rate increased 13% to $0.18 per share for the second quarter
2007, as compared to $0.16 per share for the second quarter of 2006.
On an annualized basis, this dividend represents a 2.4% yield on the
August 1, 2007 close price of $29.77.
-- Cash flows from operating activities decreased $13.5 million to $28.8
million for the six months ended June 30, 2007, primarily attributable
to the reduction of accounts receivable in 2006 due to the collection
of large aged receivables that did not recur in 2007 and to a lesser
extent decreased accounts payable and other accrued liabilities
compared to 2006, partly offset by improved operating results and
other balance sheet changes.
-- EBITDA increased 14% to $31.9 million for the second quarter of 2007
compared to $28.0 million for the second quarter of 2006. EBITDA is
defined as net income before minority interest in income of
subsidiary, interest expense, provision for income taxes,
depreciation, amortization and other non-cash stock compensation. A
reconciliation of net income to EBITDA can be found at the end of this
release.
FINANCIAL GUIDANCE
The Company reconfirms its 2007 full-year earnings per share to be in a
range of $1.65 to $1.73 per diluted share. Such a forward-looking statement
reflects McGrath RentCorp's expectations as of August 2, 2007. Actual 2007
full-year earnings per share results may be materially different and affected by
many factors, including those factors outlined in the "forward-looking
statements" paragraph at the end of this press release.
You should read this press release in conjunction with the financial
statements and notes thereto included in the Company's latest Form 10-K and
Forms 10-Q. You can visit the Company's web site at www.mgrc.com to access
information on McGrath RentCorp, including the latest filings on Form 10-K and
Form 10-Q.
About McGrath RentCorp
Founded in 1979, the Company, under the trade name Mobile Modular
Management Corporation, rents and sells modular buildings to fulfill customers'
temporary and permanent space needs in California, Texas and Florida. Mobile
Modular believes it is the largest provider of relocatable classrooms for rental
to school districts for grades K - 12 in California. The Company's TRS-RenTelco
division rents and sells electronic test equipment and is one of the leading
providers of general purpose and communications test equipment in North America.
CONFERENCE CALL NOTE: As previously announced in its press release of July
22, 2007, McGrath RentCorp will host a conference call at 5:00 p.m. Eastern Time
(2:00 p.m. Pacific Time) on August 2, 2007 to discuss the second quarter 2007
results. To participate in the teleconference, dial 1-800-218-4007 (in the
U.S.), or 1-303-262-2140 (outside the US), or visit the investor relations
section of the Company's website at www.mgrc.com. Telephone replay of the call
will be available for 48 hours following the call by dialing 1-800-405-2236 (in
the U.S.), or 1-303-590-3000 (outside the U.S.). The pass code for the call
replay is 11093069.
This press release contains statements, which constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995 and are subject to a number of risks and uncertainties. These statements
appear in a number of places. Such statements can be identified by the use of
forward-looking terminology such as "believes", "expects", "may", "estimates",
"will", "should", "plans" or "anticipates" or the negative thereof or other
variations thereon or comparable terminology, or by discussions of strategy.
These forward-looking statements are not guarantees of future performance and
involve significant risks and uncertainties. Actual results may vary materially
from those in the forward-looking statements as a result of various factors.
Important factors that could cause actual results to differ materially from the
Company's expectations are disclosed under "Risk Factors" and elsewhere in the
Company's 10-K, 10-Q and other SEC filings, including, the effectiveness of
management's strategies and decisions, general economic, stock market and
business conditions, including in the states and countries where we sell or rent
our products; continuing demand for our products; hiring, retention and
motivation of key personnel; failure by third parties to manufacture our
products in a timely manner and to our specifications; our ability to
successfully implement information system upgrades; our ability to finance
expansion and to locate and consummate acquisitions; fluctuations in interest
rates and the Company's ability to manage credit risk; our ability to
effectively manage our rental assets; the risk that we may be subject to
litigation and claims from employees, vendors, customers and other third
parties; fluctuations in the Company's effective tax rate; changes in financial
accounting standards; our failure to comply with internal control requirements;
catastrophic loss to our facilities; state funding for education; our failure,
or the failure of our products, to comply with current, new or modified
statutory or regulatory requirements; success of the Company's strategic growth
initiatives; risks associated with doing business with government entities;
seasonality of our educational and electronics business; intense industry
competition; our ability to timely deliver, install and redeploy our modular
products; significant increases in raw materials, labor, and other costs; and
risks associated with operating internationally. There may be other factors not
listed above that could cause actual results to vary materially from the
forward-looking statements described in this press release. The Company assumes
no obligation to update any forward-looking statements contained in this press
release as a result of new information, future events, or developments.
MCGRATH RENTCORP
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
- ----------------------------------------------------------------------
Three Months Six Months Ended
Ended June 30, June 30,
---------------- -------------------
(in thousands, except per share
amounts) 2007 2006 2007 2006
- ----------------------------------------------------------------------
REVENUES
- ----------------------------------
Rental $44,995 $41,168 $ 88,303 $ 80,839
Rental Related Services 8,598 7,099 16,020 14,166
------- -------- --------- ---------
Rental Operations 53,593 48,267 104,323 95,005
Sales 13,224 11,769 22,567 22,267
Other 630 637 1,310 1,257
------- -------- --------- ---------
Total Revenues 67,447 60,673 128,200 118,529
------- -------- --------- ---------
COSTS AND EXPENSES
- ----------------------------------
Direct Costs of Rental
Operations
Depreciation of Rental
Equipment 12,730 11,314 24,749 22,172
Rental Related Services 6,166 4,748 11,259 9,708
Other 8,996 9,763 16,594 17,769
------- -------- --------- ---------
Total Direct Costs of
Rental Operations 27,892 25,825 52,602 49,649
Costs of Sales 9,203 8,559 15,729 15,888
------- -------- --------- ---------
Total Costs 37,095 34,384 68,331 65,537
------- -------- --------- ---------
Gross Profit 30,352 26,289 59,869 52,992
Selling and Administrative 12,607 10,802 24,255 22,356
------- -------- --------- ---------
Income from Operations 17,745 15,487 35,614 30,636
Interest 2,832 2,773 5,453 5,126
------- -------- --------- ---------
Income Before Provision for
Income Taxes 14,913 12,714 30,161 25,510
Provision for Income Taxes 5,816 4,078 11,763 9,069
------- -------- --------- ---------
Income Before Minority
Interest 9,097 8,636 18,398 16,441
Minority Interest in Income
(Loss) of Subsidiary 12 (33) (15) (65)
------- -------- --------- ---------
Net Income $ 9,085 $ 8,669 $ 18,413 $ 16,506
======= ======== ========= =========
Earnings Per Share:
Basic $ 0.36 $ 0.35 $ 0.73 $ 0.66
Diluted $ 0.36 $ 0.34 $ 0.72 $ 0.66
Shares Used in Per Share
Calculation:
Basic 25,233 24,956 25,174 24,911
Diluted 25,491 25,209 25,431 25,211
Cash Dividends Declared Per Share $ 0.18 $ 0.16 $ 0.36 $ 0.32
MCGRATH RENTCORP
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
- ----------------------------------------------------------------------
June 30, December 31,
---------- ------------
(in thousands) 2007 2006
- ----------------------------------------------------------------------
ASSETS
- -----------------------------------------------
Cash $ 321 $ 349
Accounts Receivable, net of allowance for
doubtful accounts of $1,200 in 2007 and $1,000
in 2006 64,159 59,834
Rental Equipment, at cost:
Relocatable Modular Buildings 468,388 451,828
Electronic Test Equipment 209,688 186,673
---------- ------------
678,076 638,501
Less Accumulated Depreciation (203,669) (187,159)
---------- ------------
Rental Equipment, net 474,407 451,342
---------- ------------
Property, Plant and Equipment, net 58,504 58,146
Prepaid Expenses and Other Assets 16,918 15,871
---------- ------------
Total Assets $ 614,309 $ 585,542
========== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
- -----------------------------------------------
Liabilities:
Notes Payable $ 185,981 $ 165,557
Accounts Payable and Accrued Liabilities 51,171 55,509
Deferred Income 18,461 25,852
Minority Interest in Subsidiary 3,465 3,479
Deferred Income Taxes, net 108,656 104,353
---------- ------------
Total Liabilities 367,734 354,750
---------- ------------
Shareholders' Equity:
Common Stock, no par value -
Authorized -- 40,000 shares
Issued and Outstanding -- 25,322 shares in
2007 and 25,090 shares in 2006 40,425 33,963
Retained Earnings 206,150 196,829
---------- ------------
Total Shareholders' Equity 246,575 230,792
---------- ------------
Total Liabilities and Shareholders'
Equity $ 614,309 $ 585,542
========== ============
MCGRATH RENTCORP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended
June 30,
-------------------
(in thousands) 2007 2006
- ----------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
- ---------------------------------------------------
Net Income $ 18,413 $ 16,506
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation 25,902 23,223
Provision for Doubtful Accounts 430 171
Non-Cash Stock Compensation 1,704 1,548
Gain on Sale of Rental Equipment (4,350) (4,134)
Change In:
Accounts Receivable (4,755) 9,887
Prepaid Expenses and Other Assets (1,047) (1,631)
Accounts Payable and Accrued Liabilities (4,434) 4,375
Deferred Income (7,391) (7,474)
Deferred Income Taxes 4,303 (131)
--------- ---------
Net Cash Provided by Operating Activities 28,775 42,340
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
- ---------------------------------------------------
Purchase of Rental Equipment (54,965) (71,047)
Purchase of Property, Plant and Equipment (1,511) (1,505)
Proceeds from Sale of Rental Equipment 11,040 9,457
--------- ---------
Net Cash Used in Investing Activities (45,436) (63,095)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
- ---------------------------------------------------
Net Borrowings Under Bank Lines of Credit 20,424 26,268
Proceeds from the Exercise of Stock Options 3,374 1,441
Excess Tax Benefit from Exercise and
Disqualifying Disposition of Stock Options 1,385 626
Payment of Dividends (8,550) (7,471)
--------- ---------
Net Cash Provided by Financing Activities 16,633 20,864
--------- ---------
Net Increase (Decrease) in Cash (28) 109
Cash Balance, beginning of period 349 276
--------- ---------
Cash Balance, end of period $ 321 $ 385
========= =========
Interest Paid, during the period $ 5,632 $ 5,017
========= =========
Income Taxes Paid, during the period $ 6,076 $ 8,573
========= =========
Dividends Declared, not yet paid $ 4,558 $ 3,994
========= =========
Rental Equipment Acquisitions, not yet paid $ 8,970 $ 7,308
========= =========
Mobile Modular - Q2 2007 compared to Q2 2006 (Unaudited)
(dollar amounts in thousands) Three Months Ended Increase
June 30, (Decrease)
-------------------- ------------
2007 2006 $ %
--------- --------- ------------
Revenues
- -------------------------------------
Rental $ 24,730 $ 21,602 $ 3,128 14%
Rental Related Services 8,116 6,779 1,337 20%
--------- --------- --------
Rental Operations 32,846 28,381 4,465 16%
Sales 6,085 7,332 (1,247)-17%
Other 157 178 (21)-12%
--------- --------- --------
Total Revenues $ 39,088 $ 35,891 $ 3,197 9%
--------- --------- --------
Gross Profit
- -------------------------------------
Rental $ 15,328 $ 11,858 $ 3,470 29%
Rental Related Services 2,448 2,397 51 2%
--------- --------- --------
Rental Operations 17,776 14,255 3,521 25%
Sales 1,767 1,793 (26) -1%
Other 157 178 (21)-12%
--------- --------- --------
Total Gross Profit $ 19,700 $ 16,226 $ 3,474 21%
--------- --------- --------
--------- --------- --------
Pre-tax Income $ 10,981 $ 8,301 $ 2,680 32%
--------- --------- --------
Other Information
- -------------------------------------
Depreciation of Rental Equipment $ 3,019 $ 2,618 $ 401 15%
Interest Expense Allocation $ 2,000 $ 2,043 $ (43) -2%
Average Rental Equipment (1) $417,320 $372,051 $45,269 12%
Average Rental Equipment on Rent (1) $342,683 $307,599 $35,084 11%
Average Monthly Total Yield (2) 1.98% 1.94% 2%
Average Utilization (3) 82.1% 82.7% -1%
Average Monthly Rental Rate (4) 2.41% 2.34% 3%
Period End Rental Equipment (1) $421,170 $375,227 $45,943 12%
Period End Utilization (3) 82.8% 83.3% -1%
Period End Floors (1) 25,200 23,422 1,778 8%
- ----------------------------------------------------------------------
1 Average and Period End Rental Equipment represents the cost of
rental equipment excluding new equipment inventory and accessory
equipment. Period End Floors 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 Period End Utilization is calculated by dividing the cost of rental
equipment on rent by the total cost of rental equipment excluding new
equipment inventory and accessory equipment. Average Utilization for
the period is calculated using the average costs of the 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.
TRS-RenTelco - Q2 2007 compared to Q2 2006 (Unaudited)
(dollar amounts in thousands) Three Months Ended Increase
June 30, (Decrease)
------------------ ------------
2007 2006 $ %
------------------ ------------
Revenues
- ---------------------------------------
Rental $ 20,265 $ 19,566 $ 699 4%
Rental Related Services 482 320 162 51%
------------------ --------
Rental Operations 20,747 19,886 861 4%
Sales 5,636 3,223 2,413 75%
Other 473 459 14 3%
------------------ --------
Total Revenues $ 26,856 $ 23,568 $ 3,288 14%
------------------ --------
Gross Profit
- ---------------------------------------
Rental $ 7,941 $ 8,233 $ (292) -4%
Rental Related Services (16) (46) 30 65%
------------------ --------
Rental Operations 7,925 8,187 (262) -3%
Sales 1,689 1,127 562 50%
Other 473 459 14 3%
------------------ --------
Total Gross Profit $ 10,087 $ 9,773 314 3%
------------------ --------
------------------ --------
Pre-tax Income $ 3,830 $ 4,688 $ (858)-18%
------------------ --------
Other Information
- ---------------------------------------
Depreciation of Rental Equipment $ 9,711 $ 8,696 $ 1,015 12%
Interest Expense Allocation $ 959 $ 862 $ 97 11%
Average Rental Equipment (1) $203,688 $167,478 $36,210 22%
Average Rental Equipment on Rent (1) $135,366 $119,061 $16,305 14%
Average Monthly Total Yield (2) 3.32% 3.89% -15%
Average Utilization (3) 66.5% 71.1% -6%
Average Monthly Rental Rate (4) 4.99% 5.48% -9%
Period End Rental Equipment (1) $207,937 $173,910 $34,027 20%
Period End Utilization (3) 67.2% 71.3% -6%
- ----------------------------------------------------------------------
1 Average and Period End Rental Equipment represents the cost of
rental equipment excluding accessory equipment.
2 Average Monthly Total Yield is calculated by dividing the averages
of monthly rental revenues by the cost of rental equipment, for the
period.
3 Period End Utilization is calculated by dividing the cost of rental
equipment on rent by the total cost of rental equipment excluding
accessory equipment. Average Utilization for the period is calculated
using the average costs of the 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.
Mobile Modular - Six Months Ended 6/30/07 compared to Six Months Ended
6/30/06 (Unaudited)
(dollar amounts in thousands) Six Months Ended Increase
June 30, (Decrease)
------------------- ------------
2007 2006 $ %
--------- --------- ------------
Revenues
- --------------------------------------
Rental $ 48,566 $ 43,010 $ 5,556 13%
Rental Related Services 15,165 13,545 1,620 12%
--------- --------- --------
Rental Operations 63,731 56,555 7,176 13%
Sales 10,251 12,095 (1,844)-15%
Other 319 361 (42)-12%
--------- --------- --------
Total Revenues $ 74,301 $ 69,011 $ 5,290 8%
--------- --------- --------
Gross Profit
- --------------------------------------
Rental $ 31,070 $ 25,234 5,836 23%
Rental Related Services 4,768 4,635 133 3%
--------- --------- --------
Rental Operations 35,838 29,869 5,969 20%
Sales 3,074 3,135 (61) -2%
Other 319 361 (42)-12%
--------- --------- --------
Total Gross Profit $ 39,231 $ 33,365 $ 5,866 18%
--------- --------- --------
--------- --------- --------
Pre-tax Income $ 22,163 $ 17,364 $ 4,799 28%
--------- --------- --------
Other Information
- --------------------------------------
Depreciation of Rental Equipment $ 5,948 $ 5,138 $ 810 16%
Interest Expense Allocation $ 3,893 $ 3,789 $ 104 3%
Average Rental Equipment (1) $414,981 $370,418 $44,563 12%
Average Rental Equipment on Rent (1) $339,166 $306,861 $32,305 11%
Average Monthly Total Yield (2) 1.95% 1.94% 1%
Average Utilization (3) 81.7% 82.8% -1%
Average Monthly Rental Rate (4) 2.39% 2.34% 2%
Period End Rental Equipment (1) $421,170 $375,227 $45,943 12%
Period End Utilization (3) 82.8% 83.3% -1%
Period End Floors (1) 25,200 23,422 1,778 8%
- ----------------------------------------------- ----------------------
1 Average and Period End Rental Equipment represents the cost of
rental equipment excluding new equipment inventory and accessory
equipment. Period End Floors 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 Period End Utilization is calculated by dividing the cost of rental
equipment on rent by the total cost of rental equipment excluding new
equipment inventory and accessory equipment. Average Utilization for
the period is calculated using the average costs of the 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.
TRS-RenTelco - Six Months Ended 6/30/07 compared to Six Months Ended
6/30/06 (Unaudited)
(dollar amounts in thousands) Six Months Ended Increase
June 30, (Decrease)
------------------- ------------
2007 2006 $ %
--------- --------- ------------
Revenues
- --------------------------------------
Rental $ 39,737 $ 37,829 $ 1,908 5%
Rental Related Services 855 621 234 38%
--------- --------- --------
Rental Operations 40,592 38,450 2,142 6%
Sales 9,727 7,702 2,025 26%
Other 991 896 95 11%
--------- --------- --------
Total Revenues $ 51,310 $ 47,048 $ 4,262 9%
--------- --------- --------
Gross Profit
- --------------------------------------
Rental $ 15,890 $ 15,664 $ 226 1%
Rental Related Services (7) (177) 170 96%
--------- --------- --------
Rental Operations 15,883 15,487 396 3%
Sales 3,140 2,841 299 11%
Other 991 896 95 11%
--------- --------- --------
Total Gross Profit $ 20,014 $ 19,224 $ 790 4%
--------- --------- --------
--------- --------- --------
Pre-tax Income $ 8,118 $ 8,680 $ (562) -6%
--------- --------- --------
Other Information
- --------------------------------------
Depreciation of Rental Equipment $ 18,801 $ 17,034 $ 1,767 10%
Interest Expense Allocation $ 1,837 $ 1,580 $ 257 16%
Average Rental Equipment (1) $197,581 $162,457 $35,124 22%
Average Rental Equipment on Rent (1) $131,333 $114,143 $17,190 15%
Average Monthly Total Yield (2) 3.35% 3.88% -14%
Average Utilization (3) 66.5% 70.3% -5%
Average Monthly Rental Rate (4) 5.04% 5.52% -9%
Period End Rental Equipment (1) $207,937 $173,910 $34,027 20%
Period End Utilization (3) 67.2% 71.3% -6%
- ----------------------------------------------------------------------
1 Average and Period End Rental Equipment represents the cost of
rental equipment excluding accessory equipment.
2 Average Monthly Total Yield is calculated by dividing the averages
of monthly rental revenues by the cost of rental equipment, for the
period.
3 Period End Utilization is calculated by dividing the cost of rental
equipment on rent by the total cost of rental equipment excluding
accessory equipment. Average Utilization for the period is calculated
using the average costs of the 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 Net Income to EBITDA
The Company presents EBITDA as a financial measure as management believes
it provides useful information 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 business. EBITDA is defined by the
Company as net income before minority interest in income of subsidiary, interest
expense, provision for income taxes, depreciation, amortization, and non-cash
stock compensation. In addition, several of the loan covenants and the
determination of the interest rate related to the Company's revolving line of
credit are expressed by reference to this financial measure, similarly
calculated. 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 generally accepted accounting principles in the United States
or as a measure of the Company's profitability or liquidity. The Company's
EBITDA may not be comparable to similarly titled measures presented by other
companies. Since EBITDA is a non-GAAP financial measure as defined by the
Securities and Exchange Commission, the following table reconciles EBITDA to the
most directly comparable financial measures calculated and presented in
accordance with accounting principles generally accepted in the United States
for the three, six and twelve months ended June 30, 2007 and 2006.
Reconciliation of Net Income to EBITDA
(dollar amounts Three Months Six Months Ended Twelve Months Ended
in thousands) Ended June 30, June 30,
June 30,
----------------- ----------------- -------------------
2007 2006 2007 2006 2007 2006
-------- -------- -------- -------- --------- ---------
Net Income $ 9,085 $ 8,669 $18,413 $16,506 $ 42,985 $ 40,682
Minority
Interest in
Income
(Loss) of
Subsidiary 12 (33) (15) (65) 330 100
Provision for
Income Taxes 5,816 4,078 11,763 9,069 26,903 23,458
Interest 2,832 2,773 5,453 5,126 11,087 9,385
-------- -------- -------- -------- --------- ---------
Income from
Operations 17,745 15,487 35,614 30,636 81,305 73,625
Depreciation
and
Amortization 13,314 11,840 25,902 23,223 50,140 46,180
Non-Cash
Stock
Compensation 854 718 1,704 1,548 3,281 1,592
-------- -------- -------- -------- --------- ---------
EBITDA (1) $31,913 $28,045 $63,220 $55,407 $134,726 $121,397
======== ======== ======== ======== ========= =========
EBITDA Margin
(2) 47% 46% 49% 47% 49% 44%
1. EBITDA is defined as net income before minority interest in income
of subsidiary, interest expense, provision for income taxes,
depreciation, amortization, and other non-cash stock compensation.
2. EBITDA Margin is calculated as EBITDA divided by total revenues for
the period.
CONTACT: McGrath RentCorp
Keith E. Pratt, 925-606-9200
Chief Financial Officer