mgrc-10q_20220331.htm
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITY AND EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITY AND EXCHANGE ACT OF 1934

Commission file number 000-13292

 

McGRATH RENTCORP

(Exact name of registrant as specified in its Charter)

 

 California

94-2579843

(State or other jurisdiction

of incorporation or organization)

(I.R.S. Employer

Identification No.)

5700 Las Positas Road, Livermore, CA 94551-7800

(Address of principal executive offices)

Registrant’s telephone number: (925) 606-9200

Securities registered pursuant to Section 12(b) of the Act

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock

MGRC

NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

☒ 

 

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

  

 

Smaller reporting company

 

 

 

 

 

 

 

 

Emerging growth company

 

  

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period of complying with any new or revised financial accounting standards provided pursuant to section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

As of April 27, 2022, 24,345,398 shares of Registrant’s Common Stock were outstanding.

 


 

FORWARD LOOKING STATEMENTS

Statements contained in this Quarterly Report on Form 10-Q (this “Form 10-Q”) which are not historical facts are 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 (the “Company’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.

Management cautions that forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that could cause our actual results to differ materially from those projected in such forward-looking statements. Further, our future business, financial condition and results of operations could differ materially from those anticipated by such forward-looking statements and are subject to risks and uncertainties as set forth under “Risk Factors” in this Form 10-Q.

Forward-looking statements are made only as of the date of this Form 10-Q and are based on management’s reasonable assumptions, however these assumptions can be wrong or affected by known or unknown risks and uncertainties.   No forward-looking statement can be guaranteed and subsequent facts or circumstances may contradict, obviate, undermine or otherwise fail to support or substantiate such statements.  Readers should not place undue reliance on these forward-looking statements and are cautioned that any such forward-looking statements are not guarantees of future performance. Except as otherwise required by law, we are under no duty to update any of the forward-looking statements after the date of this Form 10-Q to conform such statements to actual results or to changes in our expectations.

 

 

2


 

Part I - Financial Information

Item 1. Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

Board of Directors and Shareholders

 

McGrath RentCorp

 

Results of review of interim financial statements

We have reviewed the accompanying condensed consolidated balance sheet of McGrath RentCorp (a California Corporation), and subsidiaries (the “Company”) as of March 31, 2022, and the related condensed consolidated statements of income, comprehensive income, shareholders’ equity, and cash flows for the three-months ended March 31, 2022 and 2021, and the related notes (collectively referred to as the “interim financial statements”). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

 

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheet of the Company as of December 31, 2021, and the related consolidated statements of income, comprehensive income, shareholders’ equity, and cash flows for the year then ended (not presented herein); and in our report dated February 23, 2022, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2021, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

 

Basis for review results

These interim financial statements are the responsibility of the Company’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our reviews in accordance with the standards of the PCAOB. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

 

/s/ GRANT THORNTON LLP

San Jose, California

April 28, 2022

 

 

3


 

McGRATH RENTCORP

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

 

 

 

Three Months Ended March 31,

 

(in thousands, except per share amounts)

 

2022

 

 

2021

 

Revenues

 

 

 

 

 

 

 

 

Rental

 

$

104,241

 

 

$

86,087

 

Rental related services

 

 

24,317

 

 

 

19,669

 

Rental operations

 

 

128,558

 

 

 

105,756

 

Sales

 

 

15,876

 

 

 

14,611

 

Other

 

 

939

 

 

 

828

 

Total revenues

 

 

145,373

 

 

 

121,195

 

Costs and Expenses

 

 

 

 

 

 

 

 

Direct costs of rental operations:

 

 

 

 

 

 

 

 

Depreciation of rental equipment

 

 

23,874

 

 

 

21,255

 

Rental related services

 

 

18,143

 

 

 

14,604

 

Other

 

 

27,823

 

 

 

19,707

 

Total direct costs of rental operations

 

 

69,840

 

 

 

55,566

 

Costs of sales

 

 

9,044

 

 

 

8,548

 

Total costs of revenues

 

 

78,884

 

 

 

64,114

 

Gross profit

 

 

66,489

 

 

 

57,081

 

Selling and administrative expenses

 

 

39,127

 

 

 

33,137

 

Income from operations

 

 

27,362

 

 

 

23,944

 

Other income (expense):

 

 

 

 

 

 

 

 

Interest expense

 

 

(2,820

)

 

 

(1,783

)

Foreign currency exchange gain (loss)

 

 

13

 

 

 

(55

)

Income before provision for income taxes

 

 

24,555

 

 

 

22,106

 

Provision for income taxes

 

 

5,762

 

 

 

4,708

 

Net income

 

$

18,793

 

 

$

17,398

 

Earnings per share:

 

 

 

 

 

 

 

 

Basic

 

$

0.77

 

 

$

0.72

 

Diluted

 

$

0.77

 

 

$

0.71

 

Shares used in per share calculation:

 

 

 

 

 

 

 

 

Basic

 

 

24,285

 

 

 

24,153

 

Diluted

 

 

24,534

 

 

 

24,512

 

Cash dividends declared per share

 

$

0.455

 

 

$

0.435

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

4


 

McGRATH RENTCORP

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

 

 

 

Three Months Ended March 31,

 

(in thousands)

 

2022

 

 

2021

 

Net income

 

$

18,793

 

 

$

17,398

 

Other comprehensive income:

 

 

 

 

 

 

 

 

Foreign currency translation adjustment, net of tax impact

 

 

3

 

 

 

38

 

Comprehensive income

 

$

18,796

 

 

$

17,436

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

5


 

McGrath RentCorp

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

 

 

 

March 31,

 

 

December 31,

 

(in thousands)

 

2022

 

 

2021

 

Assets

 

 

 

 

 

 

 

 

Cash

 

$

1,603

 

 

$

1,491

 

Accounts receivable, net of allowance for credit losses of $2,125 in 2022 and 2021

 

 

151,564

 

 

 

159,499

 

Rental equipment, at cost:

 

 

 

 

 

 

 

 

Relocatable modular buildings

 

 

1,059,030

 

 

 

1,040,094

 

Electronic test equipment

 

 

378,766

 

 

 

361,391

 

Liquid and solid containment tanks and boxes

 

 

308,790

 

 

 

309,908

 

 

 

 

1,746,586

 

 

 

1,711,393

 

Less: accumulated depreciation

 

 

(663,631

)

 

 

(646,169

)

Rental equipment, net

 

 

1,082,955

 

 

 

1,065,224

 

Property, plant and equipment, net

 

 

138,515

 

 

 

135,325

 

Prepaid expenses and other assets

 

 

50,732

 

 

 

54,945

 

Intangible assets, net

 

 

45,566

 

 

 

47,049

 

Goodwill

 

 

132,305

 

 

 

132,393

 

Total assets

 

$

1,603,240

 

 

$

1,595,926

 

Liabilities and Shareholders' Equity

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

Notes payable

 

$

423,974

 

 

$

426,451

 

Accounts payable and accrued liabilities

 

 

138,690

 

 

 

136,313

 

Deferred income

 

 

63,939

 

 

 

58,716

 

Deferred income taxes, net

 

 

238,749

 

 

 

242,425

 

Total liabilities

 

 

865,352

 

 

 

863,905

 

Shareholders’ equity:

 

 

 

 

 

 

 

 

Common stock, no par value - Authorized 40,000 shares

 

 

 

 

 

 

 

 

Issued and outstanding - 24,335 shares as of March 31, 2022 and 24,260 shares as

   of December 31, 2021

 

 

106,765

 

 

 

108,610

 

Retained earnings

 

 

631,174

 

 

 

623,465

 

Accumulated other comprehensive loss

 

 

(51

)

 

 

(54

)

Total shareholders’ equity

 

 

737,888

 

 

 

732,021

 

Total liabilities and shareholders’ equity

 

$

1,603,240

 

 

$

1,595,926

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

6


 

McGrath RentCorp

CONDENSED Consolidated Statements OF SHAREHOLDERS’ EQUITY

(unaudited)

 

 

 

Common Stock

 

 

Retained

 

 

Accumulated

Other

Comprehensive

 

 

Total

Shareholders’

 

(in thousands, except per share amounts)

 

Shares

 

 

Amount

 

 

Earnings

 

 

Income (Loss)

 

 

Equity

 

Balance at December 31, 2021

 

 

24,260

 

 

$

108,610

 

 

$

623,465

 

 

$

(54

)

 

$

732,021

 

Net income

 

 

 

 

 

 

 

 

18,793

 

 

 

 

 

 

18,793

 

Share-based compensation

 

 

 

 

 

1,760

 

 

 

 

 

 

 

 

 

1,760

 

Common stock issued under stock plans, net of shares

   withheld for employee taxes

 

 

75

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxes paid related to net share settlement of stock awards

 

 

 

 

 

(3,605

)

 

 

 

 

 

 

 

 

(3,605

)

Dividends accrued of $0.455 per share

 

 

 

 

 

 

 

 

(11,084

)

 

 

 

 

 

(11,084

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

3

 

 

 

3

 

Balance at March 31, 2022

 

 

24,335

 

 

$

106,765

 

 

$

631,174

 

 

$

(51

)

 

$

737,888

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

 

Common Stock

 

 

Retained

 

 

Accumulated

Other

Comprehensive

 

 

Total

Shareholders’

 

(in thousands, except per share amounts)

 

Shares

 

 

Amount

 

 

Earnings

 

 

Income (Loss)

 

 

Equity

 

Balance at December 31, 2020

 

 

24,128

 

 

$

106,289

 

 

$

576,419

 

 

$

(104

)

 

$

682,604

 

Net income

 

 

 

 

 

 

 

 

17,398

 

 

 

 

 

 

17,398

 

Share-based compensation

 

 

 

 

 

1,777

 

 

 

 

 

 

 

 

 

1,777

 

Common stock issued under stock plans, net of shares

   withheld for employee taxes

 

 

78

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxes paid related to net share settlement of stock awards

 

 

 

 

 

(3,482

)

 

 

 

 

 

 

 

 

(3,482

)

Dividends accrued of $0.435 per share

 

 

 

 

 

 

 

 

(10,650

)

 

 

 

 

 

(10,650

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

38

 

 

 

38

 

Balance at March 31, 2021

 

 

24,206

 

 

$

104,584

 

 

$

583,167

 

 

$

(66

)

 

$

687,685

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

 

7


 

McGrath RentCorp

CONDENSED Consolidated Statements of Cash Flows

(unaudited)

 

 

 

Three Months Ended March 31,

 

(in thousands)

 

2022

 

 

2021

 

Cash Flows from Operating Activities:

 

 

 

 

 

 

 

 

Net income

 

$

18,793

 

 

$

17,398

 

Adjustments to reconcile net income to net cash provided by

   operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

27,584

 

 

 

23,460

 

Deferred income taxes

 

 

(3,676

)

 

 

(3,258

)

Provision for doubtful accounts

 

 

13

 

 

 

99

 

Share-based compensation

 

 

1,760

 

 

 

1,777

 

Gain on sale of used rental equipment

 

 

(5,364

)

 

 

(4,794

)

Foreign currency exchange (gain) loss

 

 

(13

)

 

 

55

 

Amortization of debt issuance costs

 

 

4

 

 

 

3

 

     Change in:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

7,922

 

 

 

1,009

 

Prepaid expenses and other assets

 

 

4,213

 

 

 

(94

)

Accounts payable and accrued liabilities

 

 

(4,716

)

 

 

(2,633

)

Deferred income

 

 

5,223

 

 

 

4,587

 

Net cash provided by operating activities

 

 

51,743

 

 

 

37,609

 

Cash Flows from Investing Activities:

 

 

 

 

 

 

 

 

Purchases of rental equipment

 

 

(39,430

)

 

 

(17,984

)

Purchases of property, plant and equipment

 

 

(5,417

)

 

 

(981

)

Proceeds from sales of used rental equipment

 

 

10,308

 

 

 

10,418

 

Net cash used in investing activities

 

 

(34,539

)

 

 

(8,547

)

Cash Flows from Financing Activities:

 

 

 

 

 

 

 

 

Net repayment under bank lines of credit

 

 

(2,482

)

 

 

(13,931

)

Taxes paid related to net share settlement of stock awards

 

 

(3,605

)

 

 

(3,482

)

Payment of dividends

 

 

(11,006

)

 

 

(10,554

)

Net cash used in financing activities

 

 

(17,093

)

 

 

(27,967

)

Effect of foreign currency exchange rate changes on cash

 

 

1

 

 

 

(4

)

Net increase in cash

 

 

112

 

 

 

1,091

 

Cash balance, beginning of period

 

 

1,491

 

 

 

1,238

 

Cash balance, end of period

 

$

1,603

 

 

$

2,329

 

Supplemental Disclosure of Cash Flow Information:

 

 

 

 

 

 

 

 

Interest paid, during the period

 

$

2,137

 

 

$

1,625

 

Net income taxes paid, during the period

 

$

420

 

 

$

372

 

Dividends accrued during the period, not yet paid

 

$

11,357

 

 

$

9,810

 

Rental equipment acquisitions, not yet paid

 

$

12,869

 

 

$

11,095

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

8


 

McGRATH RENTCORP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

March 31, 2022

 

 

NOTE 1. CONDENSED CONSOLIDATED FINANCIAL INFORMATION

The condensed consolidated financial statements for the three months ended March 31, 2022 and 2021 have not been audited, but in the opinion of management, all adjustments (consisting of normal recurring accruals, consolidating and eliminating entries) necessary for the fair presentation of the consolidated financial position, results of operations and cash flows of McGrath RentCorp (the “Company”) have been made.  The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”).  Certain information and note disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to those rules and regulations.  The consolidated results for the three months ended March 31, 2022 should not be considered as necessarily indicative of the consolidated results for the entire fiscal year.  These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s latest Annual Report on Form 10-K, filed with the SEC on February 23, 2022 for the year ended December 31, 2021 (the “2021 Annual Report”).

NOTE 2. REVENUE RECOGNITION

The Company’s accounting for revenues is governed by two accounting standards.  The majority of the Company’s revenues are considered lease or lease related and are accounted for in accordance with Accounting Standards Codification (ASC) 842, Leases.   Revenues determined to be non-lease related are accounted for in accordance with ASC 606, Revenue from Contracts with Customers.  The Company accounts for revenues when approval and commitment from both parties have been obtained, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable.  The Company typically recognizes non-lease related revenues at a point in time because the customer does not simultaneously consume the benefits of the Company’s promised goods and services, or performance obligations, and obtains control when delivery and installation are complete.  For contracts that have multiple performance obligations, the transaction price is allocated to each performance obligation in the contract based on the Company’s best estimate of the standalone selling prices of each distinct performance obligation in the contract.  The standalone selling price is typically determined based upon the expected cost plus an estimated margin of each performance obligation.  

The Company generally rents and sells to customers on 30 day payment terms.  The Company does not typically offer variable payment terms or accept non-monetary consideration.  Amounts billed and due from the Company’s customers are classified as Accounts receivable on the Company’s consolidated balance sheet.  For certain sales of modular buildings, progress payments from the customer are received during the manufacturing of new equipment, or the preparation of used equipment.  The advance payments are not considered a significant financing component because the payments are used to meet working capital needs during the contract and to protect the Company from the customer failing to adequately complete their obligations under the contract.  These contract liabilities are included in Deferred income on the Company’s consolidated balance sheet and totaled $21.8 million and $16.8 million at March 31, 2022 and December 31, 2021, respectively.  Sales revenues totaling $2.2 million were recognized during the three months ended March 31, 2022, which were included in the contract liability balance at December 31, 2021.  For certain modular building sales, the customer retains a small portion of the contract price until full completion of the contract, which results in revenue earned in excess of billings. These unbilled contract assets are included in Accounts receivable on the Company’s consolidated balance sheet and totaled $0.9 million and $1.3 million at March 31, 2022 and December 31, 2021, respectively.

Lease Revenues

Rental revenues from operating leases are recognized on a straight-line basis over the term of the lease for all operating segments.  Rental billings for periods extending beyond period end are recorded as deferred income and are recognized in the period earned.  Rental related services revenues are primarily associated with relocatable modular buildings and liquid and solid containment tanks and boxes leases.  For modular building leases, rental related services revenues for modifications, delivery, installation, dismantle and return delivery are lease related because the payments are considered minimum lease payments that are an integral part of the negotiated lease agreement with the customer.  These revenues are recognized on a straight-line basis over the term of the lease. Certain leases are accounted for as finance leases.  For these leases, sales revenue and the related accounts receivable are recognized upon delivery and installation of the equipment and the unearned interest is recognized over the lease term on a basis which results in a constant rate of return on the unrecovered lease investment.  Other revenues include interest income on finance leases and rental income on facility leases.

In the three months ended March 31, 2022, the Company’s lease revenues were $118.5 million, consisting of $117.8 million  of operating lease revenues and $0.7 million of finance lease revenues.  The Company has entered into finance leases to finance certain equipment sales to customers.  The lease agreements have a bargain purchase option at the end of the lease term.  For these leases, sales revenue and the related accounts receivable are recognized upon delivery and installation of the equipment and the unearned interest is recognized over the lease term on a straight-line basis, which results in a constant rate of return on the unrecovered lease investment.  The Company’s finance lease revenues for the three months ended March 31, 2022 include $0.6 million of sales revenues and $0.1 million of interest income.  

9


Non-Lease Revenues

Non-lease revenues are recognized in the period when control of the performance obligation is transferred, in an amount that reflects the consideration the Company expects to be entitled to receive in exchange for those goods or services.  For liquid and solid containment solutions, portable storage containers and electronic test equipment, rental related services revenues for delivery and return delivery are considered non-lease revenues.

Sales revenues are typically recognized at a point in time, which occurs upon the completion of delivery, installation and acceptance of the equipment by the customer.  Accounting for non-lease revenues requires judgment in determining the point in time the customer gains control of the equipment and the appropriate accounting period to recognize revenue.

Sales taxes charged to customers are reported on a net basis and are excluded from revenues and expenses.

The following table disaggregates the Company’s revenues by lease (within the scope of ASC 842) and non-lease revenues (within the scope of ASC 606) and the underlying service provided for the three months ended March 31, 2022 and 2021:

 

(in thousands)

 

Mobile

Modular

 

 

TRS-

RenTelco

 

 

Adler

Tanks

 

 

Enviroplex

 

 

Consolidated

 

Three Months Ended March 31,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Leasing

 

$

74,595

 

 

$

29,411

 

 

$

14,478

 

 

$

 

 

$

118,484

 

Non-lease:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     Rental related services

 

 

5,650

 

 

 

551

 

 

 

5,185

 

 

 

 

 

 

11,386

 

     Sales

 

 

10,375

 

 

 

3,278

 

 

 

657

 

 

 

917

 

 

 

15,227

 

     Other

 

 

25

 

 

 

251

 

 

 

 

 

 

 

 

 

276

 

     Total non-lease

 

 

16,050

 

 

 

4,080

 

 

 

5,842

 

 

 

917

 

 

 

26,889

 

          Total revenues

 

$

90,645

 

 

$

33,491

 

 

$

20,320

 

 

$

917

 

 

$

145,373

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Leasing

 

$

57,803

 

 

$

27,813

 

 

$

12,339

 

 

$

 

 

$

97,955

 

Non-lease:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     Rental related services

 

 

3,206

 

 

 

608

 

 

 

4,761

 

 

 

 

 

 

8,575

 

     Sales

 

 

7,620

 

 

 

4,877

 

 

 

608

 

 

 

1,234

 

 

 

14,339

 

     Other

 

 

19

 

 

 

305

 

 

 

2

 

 

 

 

 

 

326

 

     Total non-lease

 

 

10,845

 

 

 

5,790

 

 

 

5,371

 

 

 

1,234

 

 

 

23,240

 

          Total revenues

 

$

68,648

 

 

$

33,603

 

 

$

17,710

 

 

$

1,234

 

 

$

121,195

 

 

Customer returns of rental equipment prior to the end of the rental contract term are typically billed a cancellation fee, which is recorded as rental revenue in the period billed.  Sales of new relocatable modular buildings, portable storage containers, electronic test equipment and related accessories and liquid and solid containment tanks and boxes not manufactured by the Company are typically covered by warranties provided by the manufacturer of the products sold.  The Company typically provides limited 90-day warranties for certain sales of used rental equipment and one-year warranties on equipment manufactured by Enviroplex. Although the Company’s policy is to provide reserves for warranties when required for specific circumstances, warranty costs have not been significant.  

 

The Company’s incremental cost of obtaining lease contracts, which consists of salesperson commissions, are deferred and amortized over the initial lease term for modular leases.  Incremental costs for obtaining a contract for all other operating segments are expensed in the period incurred because the lease term is typically less than 12 months.

 

10


 

NOTE 3. EARNINGS PER SHARE

Basic earnings per share (“EPS”) is computed as net income divided by the weighted-average number of shares of common stock outstanding for the period. Diluted EPS is computed assuming conversion of all potentially dilutive securities including the dilutive effect of stock options, unvested restricted stock awards and other potentially dilutive securities.  The table below presents the weighted-average number of shares of common stock used to calculate basic and diluted earnings per share:

 

 

 

Three Months Ended

March 31,

 

(in thousands)

 

2022

 

 

2021

 

Weighted-average number of shares of common stock for

   calculating basic earnings per share

 

 

24,285

 

 

 

24,153

 

Effect of potentially dilutive securities from equity-based

   compensation

 

 

249

 

 

 

359

 

Weighted-average number of shares of common stock for

   calculating diluted earnings per share

 

 

24,534

 

 

 

24,512

 

 

 

 

 

 

 

 

 

 

 

There were no anti-dilutive securities excluded from the computation of diluted earnings per share in the three months ended March 31, 2022 and 2021.

The Company has in the past made purchases of shares of its common stock from time to time in over-the-counter market (NASDAQ) transactions, through privately negotiated, large block transactions and through a share repurchase plan, in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934.  In August 2015, the Company’s Board of Directors authorized the Company to repurchase up to 2,000,000 shares of the Company's outstanding common stock (the “Repurchase Plan”).  The amount and time of the specific repurchases are subject to prevailing market conditions, applicable legal requirements and other factors, including management’s discretion. All shares repurchased by the Company are canceled and returned to the status of authorized but unissued shares of common stock. There can be no assurance that any authorized shares will be repurchased, and the Repurchase Plan may be modified, extended or terminated by the Company’s Board of Directors at any time. There were no shares repurchased during the three months ended March 31, 2022 and 2021. As of March 31, 2022, 1,309,805 shares remained authorized for repurchase under the Repurchase Plan. 

NOTE 4. INTANGIBLE ASSETS

Intangible assets consist of the following:

 

(dollar amounts in thousands)

 

Estimated

useful life

in years

 

Average remaining life in years

 

 

Cost

 

 

Accumulated amortization

 

 

Net book value

 

March 31, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer relationships

 

8 to 11

 

 

7.1

 

 

$

50,285

 

 

$

(14,271

)

 

$

36,014

 

Non-compete agreements

 

5

 

 

4.0

 

 

 

3,296

 

 

 

(665

)

 

 

2,631

 

Customer backlog

 

0.5

 

 

 

 

1,900

 

 

 

(1,900

)

 

 

 

Trade name

 

8

 

 

7.0

 

 

 

1,200

 

 

 

(150

)

 

 

1,050

 

   Total amortizing

 

 

 

 

 

 

 

 

56,681

 

 

 

(16,986

)