UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Date of Report (Date of earliest event reported): |
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(Exact name of registrant as specified in its Charter)
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(State or other jurisdiction |
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(I.R.S. Employer Identification No.) |
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of incorporation) |
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(Address of principal executive offices)
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(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act
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Name of each exchange on which registered |
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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):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Security Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On April 28, 2021, McGrath RentCorp (the “Company”) announced via press release the Company’s results for its first quarter ended March 31, 2021. 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 Item 2.02 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 1933 or the Securities Exchange Act of 1934.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
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Exhibit No. |
Description |
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99.1 |
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104 |
Cover Page Interactive Data File (embedded within the Inline XBRL document). |
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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.
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McGRATH RENTCORP |
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Dated: |
April 28, 2021 |
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By: |
/s/ Keith E. Pratt |
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Keith E. Pratt |
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Executive Vice President and Chief Financial Officer |
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Exhibit 99.1 |
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PRESS RELEASE |
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5700 Las Positas Road Livermore, California 94551 925-606-9200 |
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FOR RELEASE April 28, 2021
McGrath RentCorp Announces Results for First Quarter 2021
LIVERMORE, CA – April 28, 2021 – McGrath RentCorp (NASDAQ: MGRC) (the “Company”), a diversified business-to-business rental company, today announced total revenues for the quarter ended March 31, 2021 of $121.2 million, a decrease of 6%, compared to the first quarter of 2020. The Company reported net income of $17.4 million, or $0.71 per diluted share, for the first quarter of 2021, compared to net income of $20.2 million, or $0.81 per diluted share, for the first quarter of 2020.
FIRST QUARTER 2021 Company HIGHLIGHTS:
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Rental revenues decreased 4% year-over-year to $86.1 million. |
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Total revenues decreased 6% year-over-year to $121.2 million. |
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Adjusted EBITDA1 decreased $5.7 million to $49.1 million, which included a $2.1 million non-operating legal expense. |
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Dividend rate increased 4% year-over-year to $0.435 per share for the first quarter of 2021. On an annualized basis, this dividend represents a 2.1% yield on the April 27, 2021 close price of $81.93 per share. |
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Joe Hanna, President and CEO of McGrath RentCorp, made the following comments regarding these results and future expectations:
“Our first quarter rental revenues declined by only 4% compared to a very strong first quarter of 2020, with the majority of the decline at Adler Tank Rentals. Despite the remaining effects of the pandemic, rental revenues at Mobile Modular and TRS-RenTelco decreased by only 2% and 1%, respectively.
While weather and pandemic uncertainty muted activity early in the quarter, we saw conditions steadily improve, which has translated to stronger bookings in many of our industry verticals. Now that vaccine distribution is a reality and the population is more confident, our customers are becoming more positive in their outlook. Commercial business has been healthy and booking momentum improved as the quarter progressed. School districts have either returned students to classrooms, or are planning to, and we are more encouraged about the outlook for our education business.
In early April we completed the acquisition of Kitchens To Go, which provides modular food service facilities for rental and sale nationwide. This addition is highly complementary to our modular building rental business. We added a capable team and quality equipment. Together we look forward to growing this new product line.
Overall, I am pleased with our start to the year. We are encouraged by recent customer and field feedback on potential project activity and we will be working hard to capitalize on this positive momentum as the year continues.”
Division HIGHLIGHTS:
All comparisons presented below are for the quarter ended March 31, 2021 to the quarter ended March 31, 2020 unless otherwise indicated.
Mobile Modular
For the first quarter of 2021, the Company’s Mobile Modular division reported income from operations of $15.7 million, a decrease of $3.7 million, or 19%. Rental revenues decreased 2% to $46.7 million, depreciation expense increased 3% to $5.8 million and other direct costs increased 2% to $12.9 million, which resulted in a decrease in gross profit on rental revenues of 4% to $28.0 million. The rental revenue decline was due to decreased demand from commercial and education customers. Rental related services revenues decreased 23% to $14.1 million, primarily due to lower revenues from site related services, with associated gross profit decreasing 17% to $4.0 million. Sales revenues increased 5% to $7.6 million, primarily due to higher new equipment sales with gross margin on sales comparable at 35%, resulting in a 5% increase in gross profit on sales revenues to $2.7 million. Selling and administrative expenses increased 10% to $19.2 million, primarily due to a non-operating legal expense recorded in 2021.
TRS-RenTelco
For the first quarter of 2021, the Company’s TRS-RenTelco division reported income from operations of $8.5 million, an increase of $0.1 million, or 1%. Rental revenues decreased 1% to $27.3 million, depreciation expense decreased 4% to $11.4 million and other direct costs increased 4% to $4.5 million, which resulted in a $0.1 million increase in gross profit on rental revenues to $11.4 million. The rental revenue decline was due to decreased demand from telecommunications customers, partly offset by increases from general purpose test equipment customers. Sales revenues were comparable at $5.1 million. Gross margin on sales was 55% in 2021 compared to 52% in 2020, resulting in a 7% increase in gross profit on sales revenues to $2.8 million. Selling and administrative expenses decreased 1% to $6.3 million.
Adler Tanks
For the first quarter of 2021, the Company’s Adler Tanks division reported income from operations of $0.8 million, a decrease of $1.9 million. Rental revenues decreased 17% to $12.2 million, depreciation expense decreased 2% to $4.1 million and other direct costs decreased 6% to $2.3 million, which resulted in a 27% decrease in gross profit on rental revenues to $5.8 million. The rental revenue decrease was primarily due to weaker business activity levels in multiple geographic and market segments. Rental related services revenues decreased 12% to $4.9 million, with gross profit on rental related services decreasing 22% to $1.0 million. Selling and administrative expenses decreased 8% to $6.3 million, primarily due to decreased travel, meal and meeting costs and lower corporate allocated expenses.
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 Kitchens To Go, the Company is raising its financial outlook.
For the full-year 2021, the Company expects:
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Total revenue: $570 million - $610 million |
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Adjusted EBITDA: $232 million - $247 million |
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Gross rental equipment capital expenditures: $90 million to $110 million |
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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. |
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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 March 31, 2021, McGrath RentCorp will host a conference call at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) on April 28, 2021 to discuss the first 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 1586503. 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 the vaccine distribution being a reality and the population more confident, stronger bookings in many of the Company’s industry verticals, the Company’s customers becoming more positive in their outlook, encouragement about the outlook for the Company’s education business, the addition of Kitchens To Go being highly complementary to the Company’s modular building rental business, and growing the new product line in this business, and being encouraged by recent customer and field feedback on potential project activity and positive momentum as the year continues, 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 Kitchen 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)
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Three Months Ended March 31, |
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(in thousands, except per share amounts) |
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2021 |
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2020 |
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Revenues |
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Rental |
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$ |
86,087 |
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$ |
89,506 |
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Rental related services |
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19,669 |
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24,511 |
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Rental operations |
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105,756 |
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114,017 |
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Sales |
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14,611 |
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14,366 |
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Other |
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828 |
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1,070 |
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Total revenues |
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121,195 |
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129,453 |
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Costs and Expenses |
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Direct costs of rental operations: |
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Depreciation of rental equipment |
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21,255 |
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21,638 |
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Rental related services |
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14,604 |
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18,263 |
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Other |
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19,707 |
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19,453 |
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Total direct costs of rental operations |
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55,566 |
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59,354 |
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Costs of sales |
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8,548 |
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8,443 |
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Total costs of revenues |
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64,114 |
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67,797 |
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Gross profit |
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57,081 |
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61,656 |
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Selling and administrative expenses |
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33,137 |
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31,954 |
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Income from operations |
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23,944 |
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29,702 |
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Other expense: |
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Interest expense |
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(1,783 |
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(2,652 |
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Foreign currency exchange loss |
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(55 |
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(436 |
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Income before provision for income taxes |
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22,106 |
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26,614 |
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Provision for income taxes |
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4,708 |
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6,455 |
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Net income |
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$ |
17,398 |
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$ |
20,159 |
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Earnings per share: |
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Basic |
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$ |
0.72 |
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$ |
0.83 |
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Diluted |
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$ |
0.71 |
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$ |
0.81 |
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Shares used in per share calculation: |
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Basic |
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24,153 |
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24,292 |
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Diluted |
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24,512 |
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24,738 |
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Cash dividends declared per share |
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$ |
0.435 |
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$ |
0.420 |
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MCGRATH RENTCORP
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
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March 31, |
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December 31, |
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(in thousands) |
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2021 |
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2020 |
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Assets |
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Cash |
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$ |
2,329 |
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$ |
1,238 |
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Accounts receivable, net of allowance for doubtful accounts of $2,100 in 2021 and 2020 |
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122,208 |
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123,316 |
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Rental equipment, at cost: |
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Relocatable modular buildings |
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886,299 |
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882,115 |
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Electronic test equipment |
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342,105 |
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333,020 |
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Liquid and solid containment tanks and boxes |
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314,444 |
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315,706 |
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1,542,848 |
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1,530,841 |
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Less accumulated depreciation |
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(606,905 |
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(592,725 |
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Rental equipment, net |
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935,943 |
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938,116 |
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Property, plant and equipment, net |
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135,034 |
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136,210 |
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Prepaid expenses and other assets |
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41,643 |
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41,549 |
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Intangible assets, net |
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7,069 |
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7,118 |
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Goodwill |
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28,197 |
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28,197 |
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Total assets |
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$ |
1,272,423 |
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$ |
1,275,744 |
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Liabilities and Shareholders' Equity |
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Liabilities: |
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Notes payable |
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$ |
208,806 |
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$ |
222,754 |
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Accounts payable and accrued liabilities |
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112,551 |
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108,334 |
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Deferred income |
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50,562 |
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45,975 |
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Deferred income taxes, net |
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212,819 |
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216,077 |
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Total liabilities |
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584,738 |
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593,140 |
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Shareholders’ equity: |
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Common stock, no par value - Authorized 40,000 shares |
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Issued and outstanding - 24,206 shares as of March 31, 2021 and 24,128 shares as of December 31, 2020 |
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104,584 |
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106,289 |
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Retained earnings |
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583,167 |
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576,419 |
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Accumulated other comprehensive loss |
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(66 |
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(104 |
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Total shareholders’ equity |
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687,685 |
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682,604 |
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Total liabilities and shareholders’ equity |
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$ |
1,272,423 |
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$ |
1,275,744 |
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MCGRATH RENTCORP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
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Three Months Ended March 31, |
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(in thousands) |
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2021 |
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2020 |
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Cash Flows from Operating Activities: |
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Net income |
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$ |
17,398 |
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$ |
20,159 |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation and amortization |
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23,460 |
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23,862 |
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Provision for doubtful accounts |
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99 |
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552 |
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Share-based compensation |
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1,777 |
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1,723 |
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Gain on sale of used rental equipment |
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(4,794 |
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(4,788 |
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Foreign currency exchange loss |
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55 |
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436 |
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Amortization of debt issuance costs |
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3 |
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3 |
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Change in: |
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Accounts receivable |
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1,009 |
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1,713 |
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Prepaid expenses and other assets |
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(94 |
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363 |
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Accounts payable and accrued liabilities |
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(2,633 |
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(6,383 |
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Deferred income |
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4,587 |
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6,943 |
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Deferred income taxes |
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(3,258 |
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1,099 |
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Net cash provided by operating activities |
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37,609 |
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45,682 |
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Cash Flows from Investing Activities: |
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Purchases of rental equipment |
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(17,984 |
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(35,374 |
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Purchases of property, plant and equipment |
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(981 |
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(3,196 |
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Proceeds from sales of used rental equipment |
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10,418 |
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10,356 |
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Net cash used in investing activities |
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(8,547 |
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(28,214 |
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Cash Flows from Financing Activities: |
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Net repayment under bank lines of credit |
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(13,931 |
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(1,890 |
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Repurchase of common stock |
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— |
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(7,852 |
) |
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Taxes paid related to net share settlement of stock awards |
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(3,482 |
) |
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(401 |
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Payment of dividends |
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(10,554 |
) |
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(9,369 |
) |
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Net cash used in financing activities |
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(27,967 |
) |
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(19,512 |
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Effect of foreign currency exchange rate changes on cash |
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(4 |
) |
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44 |
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Net (decrease) increase in cash |
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1,091 |
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(2,000 |
) |
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Cash balance, beginning of period |
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1,238 |
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2,342 |
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Cash balance, end of period |
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$ |
2,329 |
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$ |
342 |
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Supplemental Disclosure of Cash Flow Information: |
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Interest paid, during the period |
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$ |
1,625 |
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$ |
2,859 |
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Net income taxes paid, during the period |
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$ |
372 |
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$ |
363 |
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Dividends accrued during the period, not yet paid |
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$ |
9,810 |
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$ |
10,218 |
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Rental equipment acquisitions, not yet paid |
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$ |
11,095 |
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$ |
6,537 |
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MCGRATH RENTCORP |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
BUSINESS SEGMENT DATA (unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollar amounts in thousands) |
|
Mobile Modular |
|
|
TRS-RenTelco |
|
|
Adler Tanks |
|
|
Enviroplex |
|
|
Consolidated |
|
|||||
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental |
|
$ |
46,657 |
|
|
$ |
27,276 |
|
|
$ |
12,154 |
|
|
$ |
— |
|
|
$ |
86,087 |
|
|
Rental related services |
|
|
14,051 |
|
|
|
740 |
|
|
|
4,878 |
|
|
|
— |
|
|
|
19,669 |
|
|
Rental operations |
|
|
60,708 |
|
|
|
28,016 |
|
|
|
17,032 |
|
|
|
— |
|
|
|
105,756 |
|
|
Sales |
|
|
7,620 |
|
|
|
5,149 |
|
|
|
608 |
|
|
|
1,234 |
|
|
|
14,611 |
|
|
Other |
|
|
320 |
|
|
|
438 |
|
|
|
70 |
|
|
|
— |
|
|
|
828 |
|
|
Total revenues |
|
|
68,648 |
|
|
|
33,603 |
|
|
|
17,710 |
|
|
|
1,234 |
|
|
|
121,195 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct costs of rental operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
5,819 |
|
|
|
11,362 |
|
|
|
4,074 |
|
|
|
— |
|
|
|
21,255 |
|
|
Rental related services |
|
|
10,072 |
|
|
|
653 |
|
|
|
3,879 |
|
|
|
— |
|
|
|
14,604 |
|
|
Other |
|
|
12,875 |
|
|
|
4,534 |
|
|
|
2,298 |
|
|
|
— |
|
|
|
19,707 |
|
|
Total direct costs of rental operations |
|
|
28,766 |
|
|
|
16,549 |
|
|
|
10,251 |
|
|
|
— |
|
|
|
55,566 |
|
|
Costs of sales |
|
|
4,948 |
|
|
|
2,301 |
|
|
|
416 |
|
|
|
883 |
|
|
|
8,548 |
|
|
Total costs of revenues |
|
|
33,714 |
|
|
|
18,850 |
|
|
|
10,667 |
|
|
|
883 |
|
|
|
64,114 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental |
|
|
27,963 |
|
|
|
11,380 |
|
|
|
5,782 |
|
|
|
— |
|
|
|
45,125 |
|
|
Rental related services |
|
|
3,979 |
|
|
|
87 |
|
|
|
999 |
|
|
|
— |
|
|
|
5,065 |
|
|
Rental operations |
|
|
31,942 |
|
|
|
11,467 |
|
|
|
6,781 |
|
|
|
— |
|
|
|
50,190 |
|
|
Sales |
|
|
2,672 |
|
|
|
2,848 |
|
|
|
192 |
|
|
|
351 |
|
|
|
6,063 |
|
|
Other |
|
|
320 |
|
|
|
438 |
|
|
|
70 |
|
|
|
— |
|
|
|
828 |
|
|
Total gross profit |
|
|
34,934 |
|
|
|
14,753 |
|
|
|
7,043 |
|
|
|
351 |
|
|
|
57,081 |
|
|
Selling and administrative expenses |
|
|
19,237 |
|
|
|
6,298 |
|
|
|
6,267 |
|
|
|
1,335 |
|
|
|
33,137 |
|
|
Income (loss) from operations |
|
$ |
15,697 |
|
|
$ |
8,455 |
|
|
$ |
776 |
|
|
$ |
(984 |
) |
|
$ |
23,944 |
|
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,783 |
) |
|
Foreign currency exchange loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(55 |
) |
|
Provision for income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,708 |
) |
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
17,398 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Information |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average rental equipment 1 |
|
$ |
836,893 |
|
|
$ |
334,781 |
|
|
$ |
313,873 |
|
|
|
|
|
|
|
|
|
|
Average monthly total yield 2 |
|
|
1.86 |
% |
|
|
2.72 |
% |
|
|
1.29 |
% |
|
|
|
|
|
|
|
|
|
Average utilization 3 |
|
|
75.8 |
% |
|
|
68.1 |
% |
|
|
40.3 |
% |
|
|
|
|
|
|
|
|
|
Average monthly rental rate 4 |
|
|
2.45 |
% |
|
|
3.99 |
% |
|
|
3.21 |
% |
|
|
|
|
|
|
|
|
|
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 March 31, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollar amounts in thousands) |
|
Mobile Modular |
|
|
TRS-RenTelco |
|
|
Adler Tanks |
|
|
Enviroplex |
|
|
Consolidated |
|
|||||
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental |
|
$ |
47,410 |
|
|
$ |
27,536 |
|
|
$ |
14,560 |
|
|
$ |
— |
|
|
$ |
89,506 |
|
|
Rental related services |
|
|
18,144 |
|
|
|
826 |
|
|
|
5,541 |
|
|
|
— |
|
|
|
24,511 |
|
|
Rental operations |
|
|
65,554 |
|
|
|
28,362 |
|
|
|
20,101 |
|
|
|
— |
|
|
|
114,017 |
|
|
Sales |
|
|
7,256 |
|
|
|
5,109 |
|
|
|
498 |
|
|
|
1,503 |
|
|
|
14,366 |
|
|
Other |
|
|
388 |
|
|
|
592 |
|
|
|
90 |
|
|
|
— |
|
|
|
1,070 |
|
|
Total revenues |
|
|
73,198 |
|
|
|
34,063 |
|
|
|
20,689 |
|
|
|
1,503 |
|
|
|
129,453 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct costs of rental operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
5,669 |
|
|
|
11,832 |
|
|
|
4,137 |
|
|
|
— |
|
|
|
21,638 |
|
|
Rental related services |
|
|
13,350 |
|
|
|
646 |
|
|
|
4,267 |
|
|
|
— |
|
|
|
18,263 |
|
|
Other |
|
|
12,617 |
|
|
|
4,380 |
|
|
|
2,456 |
|
|
|
— |
|
|
|
19,453 |
|
|
Total direct costs of rental operations |
|
|
31,636 |
|
|
|
16,858 |
|
|
|
10,860 |
|
|
|
— |
|
|
|
59,354 |
|
|
Costs of sales |
|
|
4,703 |
|
|
|
2,448 |
|
|
|
320 |
|
|
|
972 |
|
|
|
8,443 |
|
|
Total costs of revenues |
|
|
36,339 |
|
|
|
19,306 |
|
|
|
11,180 |
|
|
|
972 |
|
|
|
67,797 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental |
|
|
29,124 |
|
|
|
11,324 |
|
|
|
7,967 |
|
|
|
— |
|
|
|
48,415 |
|
|
Rental related services |
|
|
4,794 |
|
|
|
180 |
|
|
|
1,274 |
|
|
|
— |
|
|
|
6,248 |
|
|
Rental operations |
|
|
33,918 |
|
|
|
11,504 |
|
|
|
9,241 |
|
|
|
— |
|
|
|
54,663 |
|
|
Sales |
|
|
2,553 |
|
|
|
2,661 |
|
|
|
178 |
|
|
|
531 |
|
|
|
5,923 |
|
|
Other |
|
|
388 |
|
|
|
592 |
|
|
|
90 |
|
|
|
— |
|
|
|
1,070 |
|
|
Total gross profit |
|
|
36,859 |
|
|
|
14,757 |
|
|
|
9,509 |
|
|
|
531 |
|
|
|
61,656 |
|
|
Selling and administrative expenses |
|
|
17,418 |
|
|
|
6,361 |
|
|
|
6,824 |
|
|
|
1,351 |
|
|
|
31,954 |
|
|
Income (loss) from operations |
|
$ |
19,441 |
|
|
$ |
8,396 |
|
|
$ |
2,685 |
|
|
$ |
(820 |
) |
|
|
29,702 |
|
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,652 |
) |
|
Foreign currency exchange gain |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(436 |
) |
|
Provision for income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6,455 |
) |
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
20,159 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Information |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average rental equipment 1 |
|
$ |
815,686 |
|
|
$ |
337,907 |
|
|
$ |
314,812 |
|
|
|
|
|
|
|
|
|
|
Average monthly total yield 2 |
|
|
1.94 |
% |
|
|
2.72 |
% |
|
|
1.54 |
% |
|
|
|
|
|
|
|
|
|
Average utilization 3 |
|
|
78.7 |
% |
|
|
65.3 |
% |
|
|
47.8 |
% |
|
|
|
|
|
|
|
|
|
Average monthly rental rate 4 |
|
|
2.46 |
% |
|
|
4.16 |
% |
|
|
3.23 |
% |
|
|
|
|
|
|
|
|
|
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 March 31, |
|
|
Twelve Months Ended March 31, |
|
||||||||||
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
||||
|
Net income |
$ |
17,398 |
|
|
$ |
20,159 |
|
|
$ |
99,223 |
|
|
$ |
98,516 |
|
|
Provision for income taxes |
|
4,708 |
|
|
|
6,455 |
|
|
|
28,313 |
|
|
|
32,972 |
|
|
Interest expense |
|
1,783 |
|
|
|
2,652 |
|
|
|
7,918 |
|
|
|
11,875 |
|
|
Depreciation and amortization |
|
23,460 |
|
|
|
23,862 |
|
|
|
94,241 |
|
|
|
92,238 |
|
|
EBITDA |
|
47,349 |
|
|
|
53,128 |
|
|
|
229,695 |
|
|
|
235,601 |
|
|
Share-based compensation |
|
1,777 |
|
|
|
1,723 |
|
|
|
5,603 |
|
|
|
6,223 |
|
|
Adjusted EBITDA 1 |
$ |
49,126 |
|
|
$ |
54,851 |
|
|
$ |
235,298 |
|
|
$ |
241,824 |
|
|
Adjusted EBITDA margin 2 |
|
41 |
% |
|
|
42 |
% |
|
|
42 |
% |
|
|
42 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Adjusted EBITDA to Net Cash Provided by Operating Activities
|
(dollar amounts in thousands) |
Three Months Ended March 31, |
|
|
Twelve Months Ended March 31, |
|
||||||||||
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
||||
|
Adjusted EBITDA 1 |
$ |
49,126 |
|
|
$ |
54,851 |
|
|
$ |
235,298 |
|
|
$ |
241,824 |
|
|
Interest paid |
|
(1,625 |
) |
|
|
(2,859 |
) |
|
|
(7,816 |
) |
|
|
(12,506 |
) |
|
Income taxes paid, net of refunds received |
|
(372 |
) |
|
|
(363 |
) |
|
|
(34,912 |
) |
|
|
(17,181 |
) |
|
Gain on sale of used rental equipment |
|
(4,794 |
) |
|
|
(4,788 |
) |
|
|
(19,335 |
) |
|
|
(21,482 |
) |
|
Foreign currency exchange loss (gain) |
|
55 |
|
|
|
436 |
|
|
|
(459 |
) |
|
|
401 |
|
|
Amortization of debt issuance costs |
|
3 |
|
|
|
3 |
|
|
|
11 |
|
|
|
11 |
|
|
Change in certain assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable, net |
|
1,108 |
|
|
|
2,265 |
|
|
|
3,626 |
|
|
|
(5,658 |
) |
|
Prepaid expenses and other assets |
|
(94 |
) |
|
|
363 |
|
|
|
3,350 |
|
|
|
(1,647 |
) |
|
Accounts payable and other liabilities |
|
(10,385 |
) |
|
|
(11,169 |
) |
|
|
4,013 |
|
|
|
(195 |
) |
|
Deferred income |
|
4,587 |
|
|
|
6,943 |
|
|
|
(11,345 |
) |
|
|
3,603 |
|
|
Net cash provided by operating activities |
$ |
37,609 |
|
|
$ |
45,682 |
|
|
$ |
172,431 |
|
|
$ |
187,170 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
|
FOR INFORMATION CONTACT: |
Keith E. Pratt |
|
|
EVP & Chief Financial Officer |
|
|
925-606-9200 |