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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-----------------------
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 1, 2007
-----------------------
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)
-----------------------
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 November 1, 2007, McGrath RentCorp (the "Company") announced via press
release the Company's results for its third quarter ended September 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 November 1,
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: November 1, 2007 By: /s/ Keith E. Pratt
----------------------------
Keith E. Pratt
Vice President and Chief Financial Officer
Exhibit 99.1
McGrath RentCorp Announces Results for Third Quarter 2007
EPS Decreases 8% to $0.46 for the Quarter
Rental Revenues Increase 9%
LIVERMORE, Calif.--(BUSINESS WIRE)--Nov. 1, 2007--McGrath RentCorp
(NASDAQ: MGRC) today announced revenues for the quarter ended
September 30, 2007, of $80.8 million, an increase of 4%, compared to
$77.9 million in the third quarter 2006. The Company reported net
income for the third quarter 2007 of $11.9 million, or $0.46 per
diluted share, compared to net income of $12.7 million, or $0.50 per
diluted share, in the third quarter 2006.
For the third quarter of 2007, the Company's Mobile Modular
division posted a 9% increase in rental revenues to $25.9 million
compared with $23.9 million in the third quarter 2006, with gross
profit on rental revenues increasing 11% to $16.6 million from $15.0
million in the third quarter 2006. Sales revenues increased $0.9
million from $12.4 million in the third quarter 2006 to $13.3 million,
but gross profit on sales decreased $0.5 million to $3.0 million in
the third quarter 2007 due to lower gross margins on sales of 22.6% in
the third quarter 2007 compared to 28.1% in the third quarter 2006.
Total gross profit increased 8% from $21.4 million in the third
quarter 2006 to $23.0 million in the third quarter 2007. Selling and
administrative expenses increased $0.9 million to $7.2 million in the
third quarter 2007. As a result, Mobile Modular's pre-tax income
increased 8% from $12.9 million to $14.0 million in the third quarter
2007.
For the third quarter of 2007, the Company's TRS-RenTelco division
posted an 8% increase in rental revenues to $21.7 million from $20.0
million in the third quarter of 2006, but gross profit on rental
revenues decreased 2% to $8.9 million from $9.0 million in the third
quarter 2006. The lower gross profit on rental revenues was primarily
due to 20% higher depreciation expense and 2% lower average equipment
utilization in 2007, resulting in a higher depreciation as a
percentage of rents of 47.1% in the third quarter 2007 compared to
42.7% in the third quarter 2006. Sales revenues decreased $2.0 million
from $5.7 million to $3.7 million in the third quarter 2007, with
gross profit on sales decreasing $0.5 million to $1.3 million from
$1.8 million in the third quarter 2006. Selling and administrative
expenses increased $0.5 million to $4.9 million in the third quarter
2007. As a result, TRS-RenTelco's pre-tax income decreased 17% from
$5.9 million to $4.9 million in the third quarter 2007.
Dennis Kakures, President and CEO of McGrath RentCorp, made the
following comments regarding these results and future expectations:
"Our third quarter results reflect continuing favorable growth in
rental revenues and rental assets in both our modulars and electronics
businesses. We are investing in the future earnings growth of McGrath
RentCorp, including management to support the expansion of our
existing rental businesses and our corporate development efforts on
new initiatives, and information systems. Our sales of equipment for
the third quarter at both Enviroplex and for our electronics rental
business were lower than last year reducing EPS by $0.04. We've always
emphasized rental revenue and rental asset growth are more important
than equipment sales to McGrath RentCorp's long-term profitability.
"Mobile Modular's 9% increase in rental revenues over the third
quarter of 2006 was primarily related to new educational rentals
coming online during the quarter, and to a lesser degree new
commercial rental activity. We should experience a full 12 months of
rental revenues in 2008 on a large number of these educational orders.
Gross profit on rents increasing 11% from a year ago was driven by
lower direct expense growth as compared to rental revenue growth
within the quarter.
"In California, we experienced a favorable number of educational
opportunities during the first half of 2007 as a result of the high
level of school modernization bond monies available. However, we also
experienced a more price competitive market compared to past school
ordering seasons due to higher classroom inventory levels coming into
2007. Our 2008 opportunity pipeline in California for additional
classroom rentals for modernization of public education facility
infrastructure, and the availability of funding to support such
projects, looks favorable today. However, we also expect continuing
pricing pressure, minimally in the first half of 2008, until we more
fully utilize our classroom inventory. In California, our commercial
business grew, however, at a lower rate than anticipated. This was due
to lower business activity in residential and non-residential
construction. In both our Florida and Texas markets, we experienced
strong quarter over quarter rental revenue growth. Our educational
business in both of these markets is continuing to grow nicely. Texas
had favorable quarter over quarter growth in commercial rental
activity, and 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 8% increase in rental revenues quarter over
quarter reflects a favorable rental environment with increased
business activity levels across a broad range of applications
including wireless and wire line equipment, aerospace & defense
systems and products and broadband network infrastructure. Early in
the third quarter we began to see a higher conversion level of
pipeline opportunities to bookings. This was our highest rental
revenue quarter since the merger of TRS and RenTelco in 2004.
"TRS-RenTelco's pre-tax income for the third quarter was lower
than a year ago as a result of higher depreciation, and higher selling
and administrative expenses. Depreciation expense increased due to our
continuing purchases of the latest technology test equipment to
support growth and our need to reduce our inventories of older
technology equipment. We are also more fully staffed than a year ago.
Most of these positions are sales and marketing related and are
helping to drive our higher rental revenue levels.
"We've added over $43 million in new rental assets to our test
equipment inventory over the past 12 months. Our utilization at the
end of the third quarter was at 70% and our pipeline of opportunities
continues to be strong entering the fourth quarter. As we begin to
sell more lower utilized test equipment, we would expect a favorable
impact to both depreciation expense as a percentage of rental
revenues, and profit on sales, in supporting higher pre-tax profit
levels."
THIRD QUARTER 2007 HIGHLIGHTS (AS COMPARED TO THIRD QUARTER 2006)
-- Rental revenues increased 9% to $47.7 million. Within rental
revenues, Mobile Modular increased 9% from $23.9 million to
$25.9 million; TRS-RenTelco increased 8% from $20.0 million to
$21.7 million.
-- Sales revenues decreased 10% to $22.5 million, resulting from
lower sales volume in TRS-RenTelco and Enviroplex partly
offset by higher sales volume in Mobile Modular. The lower
sales volume and lower gross margin percentage of 26.7% in
2007 compared to 32.7% in 2006, resulted in a gross profit
decrease of $2.2 million. Sales revenues and related gross
margins can fluctuate from quarter to quarter depending on
customer requirements, equipment availability and funding.
-- Average Rental Equipment increased 14% to $649.4 million.
Within average rental equipment, Mobile Modular increased 11%
from $393.0 million to $434.7 million; TRS-RenTelco increased
22% from $175.8 million to $214.7 million.
-- Depreciation of rental equipment increased 18% to $13.4
million, with Mobile Modular increasing 12% to $3.2 million
from $2.8 million in 2006, and TRS-RenTelco increasing 20% to
$10.2 million from $8.6 million in 2006.
-- Debt decreased $1.5 million during the quarter to $184.5
million, with the Company's total liabilities to equity ratio
increasing from 1.49 to 1 at June 30, 2007 to 1.51 to 1 as of
September 30, 2007. As of September 30, 2007, the Company,
under its lines of credit, had capacity to borrow an
additional $58.5 million.
-- Dividend rate increased 13% to $0.18 per share for the third
quarter 2007, as compared to $0.16 per share for the third
quarter of 2006. On an annualized basis, this dividend
represents a 2.1% yield on the October 31, 2007 close price of
$34.28.
-- Cash flows from operating activities decreased $17.5 million
to $54.2 million for the nine months ended September 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 a slower collection of receivables
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.
-- Adjusted EBITDA increased 1% to $37.2 million for the third
quarter of 2007 compared to $36.9 million for the third
quarter of 2006. Adjusted EBITDA is defined as net income
before minority interest in income of subsidiary, interest
expense, provision for income taxes, depreciation,
amortization and non-cash stock-based compensation. A
reconciliation of Adjusted EBITDA to net cash provided by
operating activities and net income to Adjusted EBITDA can be
found at the end of this release.
FINANCIAL GUIDANCE
Based on results to date and the current forecast for the
remainder of the year, the Company expects 2007 results to be towards
the lower end of its 2007 guidance range of $1.65 to $1.73 per diluted
share. Such a forward-looking statement reflects McGrath RentCorp's
expectations as of November 1, 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 October 10, 2007, McGrath RentCorp will host a conference call at
5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) on November 1, 2007 to
discuss the third quarter 2007 results. To participate in the
teleconference, dial 1-800-218-8862 (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 11098621.
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", "appears", "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
dependence on our information technology systems and 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; the effect of our debt covenants on our flexibility to
operate the business; 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 Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
(in thousands, except per share
amounts) 2007 2006 2007 2006
- ----------------------------------------------------------------------
REVENUES
- ---------------------------------
Rental $ 47,659 $ 43,896 $135,962 $124,735
Rental Related Services 9,968 8,278 25,988 22,444
--------- -------- -------- --------
Rental Operations 57,627 52,174 161,950 147,179
Sales 22,503 25,110 45,070 47,377
Other 621 591 1,931 1,848
--------- -------- -------- --------
Total Revenues 80,751 77,875 208,951 196,404
--------- -------- -------- --------
COSTS AND EXPENSES
- ---------------------------------
Direct Costs of Rental
Operations
Depreciation of Rental
Equipment 13,427 11,399 38,176 33,571
Rental Related Services 6,660 5,587 17,919 15,295
Other 8,772 8,489 25,366 26,258
--------- -------- -------- --------
Total Direct Costs of
Rental Operations 28,859 25,475 81,461 75,124
Costs of Sales 16,501 16,890 32,230 32,778
--------- -------- -------- --------
Total Costs of Revenues 45,360 42,365 113,691 107,902
--------- -------- -------- --------
Gross Profit 35,391 35,510 95,260 88,502
Selling and Administrative 13,108 11,278 37,363 33,634
--------- -------- -------- --------
Income from Operations 22,283 24,232 57,897 54,868
Interest Expense 2,662 2,959 8,115 8,085
--------- -------- -------- --------
Income Before Provision for
Income Taxes 19,621 21,273 49,782 46,783
Provision for Income Taxes 7,652 8,296 19,415 17,365
--------- -------- -------- --------
Income Before Minority
Interest 11,969 12,977 30,367 29,418
Minority Interest in Income of
Subsidiary 92 302 77 237
--------- -------- -------- --------
Net Income $ 11,877 $ 12,675 $ 30,290 $ 29,181
========= ======== ======== ========
Earnings Per Share:
Basic $ 0.47 $ 0.51 $ 1.20 $ 1.17
Diluted $ 0.46 $ 0.50 $ 1.19 $ 1.16
Shares Used in Per Share
Calculation:
Basic 25,342 24,960 25,230 24,927
Diluted 25,607 25,152 25,482 25,190
Cash Dividends Declared Per Share $ 0.18 $ 0.16 $ 0.54 $ 0.48
- ----------------------------------------------------------------------
MCGRATH RENTCORP
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
- ----------------------------------------------------------------------
September 30, December 31,
------------- ------------
(in thousands) 2007 2006
- ----------------------------------------------------------------------
ASSETS
- -------------------------------------------
Cash $ 2,608 $ 349
Accounts Receivable, net of allowance for
doubtful accounts of $1,400 in 2007 and
$1,000 in 2006 79,031 59,834
Rental Equipment, at cost:
Relocatable Modular Buildings 470,185 451,828
Electronic Test Equipment 224,191 186,673
------------- ------------
694,376 638,501
Less Accumulated Depreciation (213,041) (187,159)
------------- ------------
Rental Equipment, net 481,335 451,342
------------- ------------
Property, Plant and Equipment, net 60,468 58,146
Prepaid Expenses and Other Assets 18,869 15,871
------------- ------------
Total Assets $ 642,311 $ 585,542
============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
- -------------------------------------------
Liabilities:
Notes Payable $ 184,500 $ 165,557
Accounts Payable and Accrued Liabilities 54,604 55,509
Deferred Income 31,314 25,852
Minority Interest in Subsidiary 3,557 3,479
Deferred Income Taxes, net 112,673 104,353
------------- ------------
Total Liabilities 386,648 354,750
------------- ------------
Shareholders' Equity:
Common Stock, no par value -
Authorized -- 40,000 shares
Issued and Outstanding -- 25,363 shares
in 2007 and 25,090 shares in 2006 42,202 33,963
Retained Earnings 213,461 196,829
------------- ------------
Total Shareholders' Equity 255,663 230,792
------------- ------------
Total Liabilities and Shareholders'
Equity $ 642,311 $ 585,542
============= ============
- ----------------------------------------------------------------------
MCGRATH RENTCORP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
- ----------------------------------------------------------------------
Nine Months Ended
September 30,
-------------------
(in thousands) 2007 2006
- ----------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
- --------------------------------------------------
Net Income $ 30,290 $ 29,181
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation 39,934 35,140
Provision for Doubtful Accounts 928 364
Non-Cash Stock-Based Compensation 2,578 2,334
Gain on Sale of Rental Equipment (7,242) (7,689)
Change In:
Accounts Receivable (20,125) (2,217)
Prepaid Expenses and Other Assets (2,998) (1,791)
Accounts Payable and Accrued Liabilities (2,957) 4,990
Deferred Income 5,462 5,169
Deferred Income Taxes 8,320 6,246
--------- ---------
Net Cash Provided by Operating Activities 54,190 71,727
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
- --------------------------------------------------
Purchase of Rental Equipment (78,384) (91,703)
Purchase of Property, Plant and Equipment (4,080) (2,728)
Proceeds from Sale of Rental Equipment 19,037 17,953
--------- ---------
Net Cash Used in Investing Activities (63,427) (76,478)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
- --------------------------------------------------
Net Borrowings Under Bank Lines of Credit 18,943 14,825
Proceeds from the Exercise of Stock Options 3,979 1,441
Excess Tax Benefit from Exercise and
Disqualifying Disposition of Stock Options 1,682 626
Repurchase of Common Stock -- (526)
Payment of Dividends (13,108) (11,465)
--------- ---------
Net Cash Provided by Financing Activities 11,496 4,901
--------- ---------
Net Increase in Cash 2,259 150
Cash Balance, beginning of period 349 276
--------- ---------
Cash Balance, end of period $ 2,608 $ 426
========= =========
Interest Paid, during the period $ 7,371 $ 7,362
========= =========
Income Taxes Paid, during the period $ 9,413 $ 10,493
========= =========
Dividends Declared, not yet paid $ 4,565 $ 3,991
========= =========
Rental Equipment Acquisitions, not yet paid $ 11,011 $ 5,615
========= =========
- ----------------------------------------------------------------------
Mobile Modular - Q3 2007 compared to Q3 2006 (Unaudited)
- ----------------------------------------------------------------------
(dollar amounts in thousands) Three Months Ended Increase
September 30, (Decrease)
------------------- -------------
2007 2006 $ %
------------------- -------------
Revenues
- ------------------------------------
Rental $ 25,935 $ 23,857 $ 2,078 9%
Rental Related Services 9,505 7,902 1,603 20%
------------------- --------
Rental Operations 35,440 31,759 3,681 12%
Sales 13,304 12,372 932 8%
Other 162 184 (22) -12%
------------------- --------
Total Revenues $ 48,906 $ 44,315 $ 4,591 10%
------------------- --------
Gross Profit
- ------------------------------------
Rental $ 16,596 $ 15,004 $ 1,592 11%
Rental Related Services 3,241 2,727 514 19%
------------------- --------
Rental Operations 19,837 17,731 2,106 12%
Sales 3,001 3,473 (472) -14%
Other 162 184 (22) -12%
------------------- --------
Total Gross Profit $ 23,000 $ 21,388 $ 1,612 8%
------------------- --------
------------------- --------
Pre-tax Income $ 13,962 $ 12,920 $ 1,042 8%
------------------- --------
Other Information
- ------------------------------------
Depreciation of Rental Equipment $ 3,188 $ 2,835 $ 353 12%
Interest Expense Allocation $ 1,874 $ 2,160 $ (286) -13%
Average Rental Equipment (1) $434,740 $392,979 $41,761 11%
Average Rental Equipment on Rent (1) $361,352 $328,762 $32,590 10%
Average Monthly Total Yield (2) 1.99% 2.02% -1%
Average Utilization (3) 83.1% 83.7% -1%
Average Monthly Rental Rate (4) 2.39% 2.42% -1%
Period End Rental Equipment (1) $443,508 $404,086 $39,422 10%
Period End Utilization (3) 82.9% 82.9% 0%
Period End Floors (1) 26,144 24,721 1,423 6%
- ----------------------------------------------------------------------
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 - Q3 2007 compared to Q3 2006 (Unaudited)
- ----------------------------------------------------------------------
(dollar amounts in thousands) Three Months Ended Increase
September 30, (Decrease)
------------------- -------------
2007 2006 $ %
------------------- -------------
Revenues
- ------------------------------------
Rental $ 21,724 $ 20,039 $ 1,685 8%
Rental Related Services 463 376 87 23%
------------------- --------
Rental Operations 22,187 20,415 1,772 9%
Sales 3,710 5,734 (2,024) -35%
Other 459 407 52 13%
------------------- --------
Total Revenues $ 26,356 $ 26,556 $ (200) -1%
------------------- --------
Gross Profit
- ------------------------------------
Rental $ 8,864 $ 9,004 $ (140) -2%
Rental Related Services 67 (36) 103 286%
------------------- --------
Rental Operations 8,931 8,968 (37) 0%
Sales 1,335 1,831 (496) -27%
Other 459 407 52 13%
------------------- --------
Total Gross Profit $ 10,725 $ 11,206 (481) -4%
------------------- --------
------------------- --------
Pre-tax Income $ 4,903 $ 5,877 $ (974) -17%
------------------- --------
Other Information
- ------------------------------------
Depreciation of Rental Equipment $ 10,239 $ 8,564 $ 1,675 20%
Interest Expense Allocation $ 915 $ 927 $ (12) -1%
Average Rental Equipment (1) $214,733 $175,827 $38,906 22%
Average Rental Equipment on Rent (1) $146,814 $123,038 $23,776 19%
Average Monthly Total Yield (2) 3.37% 3.80% -11%
Average Utilization (3) 68.4% 70.0% -2%
Average Monthly Rental Rate (4) 4.93% 5.43% -9%
Period End Rental Equipment (1) $221,752 $178,568 $43,184 24%
Period End Utilization (3) 69.9% 68.8% 2%
- ----------------------------------------------------------------------
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 - Nine Months Ended 9/30/07 compared to Nine Months
Ended 9/30/06 (Unaudited)
- ----------------------------------------------------------------------
(dollar amounts in thousands) Nine Months Ended Increase
September 30, (Decrease)
------------------- -------------
2007 2006 $ %
------------------- -------------
Revenues
- ------------------------------------
Rental $ 74,501 $ 66,867 $ 7,634 11%
Rental Related Services 24,670 21,447 3,223 15%
------------------- --------
Rental Operations 99,171 88,314 10,857 12%
Sales 23,555 24,467 (912) -4%
Other 481 545 (64) -12%
------------------- --------
Total Revenues $123,207 $113,326 $ 9,881 9%
------------------- --------
Gross Profit
- ------------------------------------
Rental $ 47,666 $ 40,238 7,428 18%
Rental Related Services 8,009 7,362 647 9%
------------------- --------
Rental Operations 55,675 47,600 8,075 17%
Sales 6,075 6,608 (533) -8%
Other 481 545 (64) -12%
------------------- --------
Total Gross Profit $ 62,231 $ 54,753 $ 7,478 14%
------------------- --------
------------------- --------
Pre-tax Income $ 36,125 $ 30,284 $ 5,841 19%
------------------- --------
Other Information
- ------------------------------------
Depreciation of Rental Equipment $ 9,136 $ 7,973 $ 1,163 15%
Interest Expense Allocation $ 5,767 $ 5,949 $ (182) -3%
Average Rental Equipment (1) $422,266 $378,962 $43,304 11%
Average Rental Equipment on Rent (1) $347,068 $315,040 $32,028 10%
Average Monthly Total Yield (2) 1.96% 1.96% 0%
Average Utilization (3) 82.2% 83.1% -1%
Average Monthly Rental Rate (4) 2.39% 2.36% 1%
Period End Rental Equipment (1) $443,508 $404,086 $39,422 10%
Period End Utilization (3) 82.9% 82.9% 0%
Period End Floors (1) 26,144 24,721 1,423 6%
- ----------------------------------------------------------------------
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 - Nine Months Ended 9/30/07 compared to Nine Months Ended
9/30/06 (Unaudited)
- ----------------------------------------------------------------------
(dollar amounts in thousands) Nine Months Ended Increase
September 30, (Decrease)
------------------- -------------
2007 2006 $ %
------------------- -------------
Revenues
- ------------------------------------
Rental $ 61,461 $ 57,868 $ 3,593 6%
Rental Related Services 1,318 997 321 32%
------------------- --------
Rental Operations 62,779 58,865 3,914 7%
Sales 13,437 13,436 1 0%
Other 1,450 1,303 147 11%
------------------- --------
Total Revenues $ 77,666 $ 73,604 $ 4,062 6%
------------------- --------
Gross Profit
- ------------------------------------
Rental $ 24,754 $ 24,668 $ 86 0%
Rental Related Services 60 (213) 273 128%
------------------- --------
Rental Operations 24,814 24,455 359 1%
Sales 4,475 4,672 (197) -4%
Other 1,450 1,303 147 11%
------------------- --------
Total Gross Profit $ 30,739 $ 30,430 $ 309 1%
------------------- --------
------------------- --------
Pre-tax Income $ 13,021 $ 14,557 $(1,536) -11%
------------------- --------
Other Information
- ------------------------------------
Depreciation of Rental Equipment $ 29,040 $ 25,598 $ 3,442 13%
Interest Expense Allocation $ 2,752 $ 2,507 $ 245 10%
Average Rental Equipment (1) $203,407 $166,660 $36,747 22%
Average Rental Equipment on Rent (1) $136,691 $116,715 $19,976 17%
Average Monthly Total Yield (2) 3.36% 3.86% -13%
Average Utilization (3) 67.2% 70.0% -4%
Average Monthly Rental Rate (4) 5.00% 5.51% -9%
Period End Rental Equipment (1) $221,752 $178,568 $43,184 24%
Period End Utilization (3) 69.9% 68.8% 2%
- ----------------------------------------------------------------------
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 Adjusted EBITDA to the most directly comparable
GAAP measures
To supplement the Company's financial data presented on a basis
consistent with Generally Accepted Accounting Principles ("GAAP"), the
Company presents Adjusted EBITDA which is defined by the Company as
net income before minority interest in income of subsidiary, interest
expense, provision for income taxes, depreciation, amortization, and
non-cash stock-based compensation.
The Company presents Adjusted EBITDA as a financial measure as
management believes it provides useful information to investors
regarding the Company's liquidity and financial condition and because
management, as well as the Company's lenders use this measure in
evaluating the performance of the Company.
Management uses Adjusted EBITDA as a supplement to GAAP measures
to further evaluate the Company's period-to-period operating
performance and evaluate the Company's ability to meet future capital
expenditure and working capital requirements. Management believes the
exclusion of non-cash charges, including stock based compensation, is
useful in measuring the Company's cash available to operations and the
performance of the Company. Because we find Adjusted EBITDA useful the
Company believes its investors will also find Adjusted EBITDA useful
in evaluating the Company's performance.
Adjusted EBITDA should not be considered in isolation or as a
substitute for net income, cash flows, or other consolidated income or
cash flow data prepared in accordance with generally accepted
accounting principles in the United States or as a measure of the
Company's profitability or liquidity. Adjusted EBITDA is not in
accordance with or an alternative for GAAP, and may be different from
non-GAAP measures used by other companies. Unlike EBITDA which may be
used by other companies or investors, Adjusted EBITDA does not include
stock-based compensation charges and income from the minority interest
in the Company's Enviroplex subsidiary. The Company believes that
Adjusted EBITDA is of limited use in that it does not reflect all of
the amounts associated with the Company's results of operations as
determined in accordance with GAAP and does not accurately reflect
real cash flow. In addition, other companies may not use Adjusted
EBITDA or may use other non-GAAP measures, limiting the usefulness of
Adjusted EBITDA. Therefore, Adjusted EBITDA should only be used to
evaluate the Company's results of operations in conjunction with the
corresponding GAAP measures. The presentation of Adjusted EBITDA is
not meant to be considered in isolation or as a substitute for the
most directly comparable GAAP measures. The Company compensates for
the limitations of Adjusted EBITDA by relying upon GAAP results to
gain a complete picture of the Company's performance. Since Adjusted
EBITDA is a non-GAAP financial measure as defined by the Securities
and Exchange Commission, the Company includes in the tables below
reconciliations of Adjusted EBITDA to the most directly comparable
financial measures calculated and presented in accordance with
accounting principles generally accepted in the United States.
Reconciliation of Net Income to Adjusted EBITDA
- ----------------------------------------------------------------------
(dollar amounts in Three Months Nine Months Twelve Months
thousands) Ended Ended Ended
September 30, September 30, September 30,
--------------- ---------------- -----------------
2007 2006 2007 2006 2007 2006
------- ------- -------- ------- -------- --------
Net Income $11,877 $12,675 $ 30,290 $29,181 $ 42,187 $ 41,286
Minority Interest
in Income of
Subsidiary 92 302 77 237 121 208
Provision for
Income Taxes 7,652 8,296 19,415 17,365 26,259 24,237
Interest 2,662 2,959 8,115 8,085 10,790 10,249
------- ------- -------- ------- -------- --------
Income from
Operations 22,283 24,232 57,897 54,868 79,357 75,980
Depreciation and
Amortization 14,032 11,917 39,934 35,140 52,255 46,765
Non-Cash Stock-
Based
Compensation 874 786 2,578 2,334 3,369 2,378
------- ------- -------- ------- -------- --------
Adjusted EBITDA (1) $37,189 $36,935 $100,409 $92,342 $134,981 $125,123
======= ======= ======== ======= ======== ========
Adjusted EBITDA
Margin (2) 46% 47% 48% 47% 48% 46%
- ----------------------------------------------------------------------
Reconciliation of Adjusted EBITDA to Net Cash Provided by Operating
Activities
- ----------------------------------------------------------------------
(dollar
amounts in Three Months Ended Nine Months Ended Twelve Months Ended
thousands) September 30, September 30, September 30,
--------------------------------------------------------
2007 2006 2007 2006 2007 2006
--------------------------------------------------------
Adjusted
EBITDA (1) $ 37,189 $36,935 $100,409 $ 92,342 $134,981 $125,123
Interest Paid (1,739) (2,345) (7,371) (7,362) (10,520) (10,255)
Income Taxes
Paid (3,337) (1,919) (9,413) (10,493) (16,168) (20,430)
Gain on Sale
of Rental
Equipment (2,892) (3,728) (7,242) (7,689) (9,904) (10,228)
Change in
certain
assets and
liabilities:
Accounts
Receivable,
net (14,872) (9,963) (19,197) 95 (15,424) 10,603
Prepaid
Expenses
and Other
Assets (1,952) (161) (2,998) (1,791) (1,058) (1,672)
Accounts
Payable and
Accrued
Liabilities 165 (298) (5,460) 3,404 (1,612) 2,757
Deferred
Income 12,853 10,695 5,462 3,221 683 (2,025)
--------------------------------------------------------
Net Cash
Provided by
Operating
Activities $ 25,415 $29,216 $ 54,190 $ 71,727 $ 80,978 $ 93,873
========================================================
- ----------------------------------------------------------------------
1 Adjusted EBITDA is defined as net income before minority
interest in income of subsidiary, interest expense, provision for
income taxes, depreciation, amortization, and other non-cash
stock-based compensation.
2 Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided
by total revenues for the period.
CONTACT: McGrath RentCorp
Keith E. Pratt, 925-606-9200
Chief Financial Officer