GlobeNewswire Inc | Jul 29, 2020 04:01PM EDT

July 29, 2020

LIVERMORE, Calif., July 29, 2020 (GLOBE NEWSWIRE) -- McGrath RentCorp (NASDAQ: MGRC) (the Company), a diversified business-to-business rental company, today announced total revenues for the quarter ended June 30, 2020 of $137.7 million, an increase of 8%, compared to the second quarter of 2019. The Company reported net income of $22.5 million, or $0.92 per diluted share, for the second quarter of 2020, compared to net income of $19.5 million, or $0.79 per diluted share, for the second quarter of 2019.

SECOND QUARTER 2020 COMPANY HIGHLIGHTS:

-- Income from operations increased 12% year-over-year to $32.7 million. -- Rental revenues decreased 3% year-over-year to $85.6 million. -- Adjusted EBITDA1 increased 11% year-over-year to $58.1 million. -- Dividend rate increased 12% year-over-year to $0.42 per share for the second quarter of 2020. On an annualized basis, this dividend represents a 3.0% yield on the July 28, 2020 close price of $55.36 per share.

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

During the second quarter, we were pleased that we successfully navigated an uncertain economic environment due to the COVID-19 pandemic while delivering an Adjusted EBITDA increase of 11%. Across the business, our teams adapted to new and challenging requirements to operate safely while serving our customers. The teams across the Company did impressive work in the quarter and we were able to deliver solid results despite unusually challenging market conditions.

For the second quarter, rental revenue growth of 4% at Mobile Modular and 2% at TRS-RenTelco was offset by a decline at Adler of 27%, resulting in an overall 3% decrease for the Company. We realized strong sales in the quarter at Mobile Modular and our classroom manufacturer Enviroplex, which accounted for the overall Company growth in gross profit for the quarter compared to a year ago. Even though some customer projects were halted at the start of the quarter due to the various statewide shelter in place orders, towards the middle of the quarter many projects resumed as customer sites gradually re-opened.

Looking forward to the second half of 2020, overall business conditions appear to have stabilized compared to April, however, we still face uncertainty as the pandemic remains an issue. While we will continue to closely monitor evolving regional conditions, we are very well positioned to provide rental solutions to our customers, which is what many are looking for in a more uncertain and capital constrained environment. We made good progress through unprecedented economic disruption in the second quarter and we are hoping for conditions to improve slowly but steadily through the remainder of the year.

DIVISION HIGHLIGHTS:

All comparisons presented below are for the quarter ended June 30, 2020 to the quarter ended June 30, 2019 unless otherwise indicated.

MOBILE MODULAR

For the second quarter of 2020, the Companys Mobile Modular division reported income from operations of $20.6 million, an increase of $4.3 million, or 26%. Rental revenues increased 4% to $46.6 million, depreciation expense increased 5% to $5.7 million and other direct costs decreased 13% to $12.4 million, which resulted in an increase in gross profit on rental revenues of 14% to $28.5 million. The rental revenue growth came from both commercial and education markets. Rental related services revenues decreased 9% to $14.5 million, with associated gross profit decreasing 2% to $4.1 million. Sales revenues more than doubled to $15.3 million, primarily due to higher new equipment sales with gross margin on sales decreasing to 29% from 37%, resulting in an 81% increase in gross profit on sales revenues to $4.5 million. Selling and administrative expenses increased 8% to $16.9 million, primarily due to higher allocated corporate expenses.

TRS-RENTELCO

For the second quarter of 2020, the Companys TRS-RenTelco division reported income from operations of $8.3 million, a decrease of $0.4 million, or 5%. Rental revenues increased 2% to $26.0 million, depreciation expense increased 16% to $11.8 million and other direct costs decreased 11% to $3.6 million, which resulted in a 5% decrease in gross profit on rental revenues to $10.7 million. The rental revenue growth was due to increased demand from the general purpose test equipment customers. Sales revenues increased 11% to $5.9 million. Gross margin on sales was 49% in 2020 compared to 51% in 2019, resulting in a 6% increase in gross profit on sales revenues to $2.9 million. Selling and administrative expenses decreased 4% to $5.9 million, primarily due to lower marketing and administrative expenses.

ADLER TANKS

For the second quarter of 2020, the Companys Adler Tanks division reported income from operations of $1.7 million, a decrease of $3.1 million, or 65%. Rental revenues decreased 27% to $13.0 million, depreciation expense was flat at $4.1 million and other direct costs decreased 35% to $2.2 million, which resulted in a 36% decrease in gross profit on rental revenues to $6.7 million. The rental revenue decrease was primarily due to COVID-19 related business disruptions and a decrease in the price of oil and gas, which contributed to weaker activities in multiple geographic and market segments. Rental related services revenues decreased 31% to $5.3 million, with gross profit on rental related services decreasing 33% to $1.3 million. Selling and administrative expenses decreased 19% to $6.4 million, primarily due to decreased allocated corporate expenses, lower marketing and administrative costs and decreased salaries and employee benefit costs.

FINANCIAL OUTLOOK:

For the third quarter 2020, the Company expects:

-- Total revenue: $140 million - $160 million -- Adjusted EBITDA1,2: $54 million - $64 million -- Gross rental equipment capital expenditures: $10 million to $15 million

Adjusted EBITDA is defined as net income before interest expense, provision for income taxes, depreciation, amortization, non-cash impairment costs and1. 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. 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 the2. 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 Companys 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.comModular Buildings www.mobilemodular.comElectronic Test Equipment www.trsrentelco.comTanks and Boxes www.adlertankrentals.comPortable Storage www.mobilemodularcontainers.comSchool Facilities Manufacturing www.enviroplex.com

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

CONFERENCE CALL NOTE:

As previously announced in its press release of July 1, 2020, McGrath RentCorp will host a conference call at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) on July 29, 2020 to discuss the second quarter 2020 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 Companys 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 8995217. In addition, a live audio webcast and replay of the call may be found in the investor relations section of the Companys 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 RentCorps 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. Hannas comments about the Company being very well positioned to provide rental solutions to its customers which is what many are looking for in a more uncertain capital constrained environment and the Company hoping for conditions to improve slowly but steadily through the remainder of the year, as well as the statement regarding the third quarter of 2020 outlook 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 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 Companys Form 10-K, Form 10-Q 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 RENTCORPCONDENSED CONSOLIDATED STATEMENTS OF INCOME(UNAUDITED)

ThreeMonthsEndedJune SixMonthsEndedJune 30, 30,(in thousands,except per 2020 2019 2020 2019 share amounts)Revenues Rental $ 85,629 $ 88,105 $ 175,135 $ 170,801 Rental related 20,475 24,467 44,986 45,922 servicesRental 106,104 112,572 220,121 216,723 operationsSales 30,669 13,707 45,035 30,532 Other 900 1,160 1,970 2,192 Total revenues 137,673 127,439 267,126 249,447 Costs and ExpensesDirect costsof rental operations:Depreciationof rental 21,583 19,726 43,221 38,687 equipmentRental related 14,894 18,137 33,157 34,500 servicesOther 18,165 21,741 37,618 41,474 Total directcosts of 54,642 59,604 113,996 114,661 rentaloperationsCosts of sales 19,799 7,954 28,242 17,900 Total costs of 74,441 67,558 142,238 132,561 revenuesGross profit 63,232 59,881 124,888 116,886 Selling andadministrative 30,540 30,815 62,494 60,510 expensesIncome from 32,692 29,066 62,394 56,376 operationsOther income (expense):Interest (2,184 ) (3,138 ) (4,836 ) (6,246 )expenseForeigncurrency 117 37 (319 ) 86 exchange gain(loss)Income beforeprovision for 30,625 25,965 57,239 50,216 income taxesProvision for 8,076 6,477 14,531 12,279 income taxesNet income $ 22,549 $ 19,488 $ 42,708 $ 37,937 Earnings per share:Basic $ 0.93 $ 0.8 $ 1.76 $ 1.57 Diluted $ 0.92 $ 0.79 $ 1.74 $ 1.54 Shares used inper share calculation:Basic 24,121 24,246 24,207 24,221 Diluted 24,471 24,579 24,612 24,561 Cash dividendsdeclared per $ 0.420 $ 0.375 $ 0.840 $ 0.750 share

MCGRATH RENTCORPCONDENSED CONSOLIDATED BALANCE SHEETS(UNAUDITED)

June 30, December 31,(in thousands) 2020 2019 Assets Cash $ 694 $ 2,342 Accounts receivable, net of allowance fordoubtful accounts of $2,200 in 2020and $1,883 125,940 128,099 in 2019Rental equipment, at cost: Relocatable modular buildings 892,339 868,807 Electronic test equipment 337,987 335,343 Liquid and solid containment tanks and boxes 316,497 316,261 1,546,823 1,520,411 Less accumulated depreciation (577,142 ) (552,911 )Rental equipment, net 969,681 967,500 Property, plant and equipment, net 133,610 131,047 Prepaid expenses and other assets 46,997 45,356 Intangible assets, net 7,223 7,334 Goodwill 28,197 28,197 Total assets $ 1,312,342 $ 1,309,875 Liabilities and Shareholders' Equity Liabilities: Notes payable $ 272,149 $ 293,431 Accounts payable and accrued liabilities 116,825 109,174 Deferred income 60,779 54,964 Deferred income taxes, net 218,753 218,270 Total liabilities 668,506 675,839 Shareholders? equity: Common stock, no par value - Authorized 40,000 sharesIssued and outstanding - 24,085 shares as ofJune 30, 2020 and 24,296 shares as of December 106,010 106,360 31, 2019Retained earnings 537,775 527,746 Accumulated other comprehensive income (loss) 51 (70 )Total shareholders? equity 643,836 634,036 Total liabilities and shareholders? equity $ 1,312,342 $ 1,309,875

MCGRATH RENTCORPCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(UNAUDITED)

Six Months Ended June 30,(in thousands) 2020 2019 Cash Flows from Operating Activities: Net income $ 42,708 $ 37,937 Adjustments to reconcile net income to net cash provided byoperating activities:Depreciation and amortization 47,663 43,087 Provision for doubtful accounts 833 371 Share-based compensation 3,224 2,746 Gain on sale of used rental equipment (9,602 ) (9,168 )Foreign currency exchange loss (gain) 319 (86 )Amortization of debt issuance costs 5 5 Change in: Accounts receivable 1,326 (373 )Prepaid expenses and other assets (1,641 ) (21,246 )Accounts payable and accrued liabilities 6,389 18,468 Deferred income 5,815 16,909 Deferred income taxes 483 3,337 Net cash provided by operating activities 97,522 91,987 Cash Flows from Investing Activities: Purchases of rental equipment (57,564 ) (90,701 )Purchases of property, plant and equipment (6,893 ) (3,961 )Proceeds from sales of used rental equipment 21,921 18,280 Net cash used in investing activities (42,536 ) (76,382 )Cash Flows from Financing Activities: Net (repayment) borrowing under bank lines of (21,288 ) 3,309 creditRepurchase of common stock (13,501 ) ? Taxes paid related to net share settlement of stock (2,340 ) (1,563 )awardsPayment of dividends (19,526 ) (17,337 )Net cash used in financing activities (56,655 ) (15,591 )Effect of foreign currency exchange rate changes on 21 (26 )cashNet decrease in cash (1,648 ) (12 )Cash balance, beginning of period 2,342 1,508 Cash balance, end of period $ 694 $ 1,496 Supplemental Disclosure of Cash Flow Information: Interest paid, during the period $ 5,031 $ 6,210 Net income taxes paid, during the period $ 2,153 $ 6,173 Dividends accrued during the period, not yet paid $ 10,255 $ 9,163 Rental equipment acquisitions, not yet paid $ 6,654 $ 8,930

MCGRATH RENTCORPBUSINESS SEGMENT DATA (unaudited)Three months ended June 30, 2020(dollar Mobile TRS- Adleramounts in Enviroplex Consolidated thousands) Modular RenTelco Tanks

Revenues Rental $ 46,628 $ 26,012 $ 12,989 $ ? $ 85,629 Rental related 14,463 670 5,342 ? 20,475 servicesRental 61,091 26,682 18,331 ? 106,104 operationsSales 15,316 5,922 232 9,199 30,669 Other 355 475 70 ? 900 Total revenues 76,762 33,079 18,633 9,199 137,673 Costs and ExpensesDirect costsof rental operations:Depreciation 5,737 11,750 4,096 ? 21,583 Rental related 10,362 517 4,015 ? 14,894 servicesOther 12,376 3,562 2,227 ? 18,165 Total directcosts of 28,475 15,829 10,338 ? 54,642 rentaloperationsCosts of sales 10,845 3,049 228 5,677 19,799 Total costs of 39,320 18,878 10,566 5,677 74,441 revenues Gross Profit Rental 28,514 10,700 6,666 ? 45,880 Rental related 4,101 153 1,327 ? 5,581 servicesRental 32,615 10,853 7,993 ? 51,461 operationsSales 4,471 2,873 4 3,522 10,870 Other 356 475 70 ? 901 Total gross 37,442 14,201 8,067 3,522 63,232 profitSelling andadministrative 16,857 5,875 6,353 1,455 30,540 expensesIncome from $ 20,585 $ 8,326 $ 1,714 $ 2,067 32,692 operationsInterest (2,184 )expenseForeigncurrency 117 exchange gainProvision for (8,076 )income taxesNet income $ 22,549 Other InformationAverage rental $ 822,743 $ 338,919 $ 314,780 equipment ^1Averagemonthly total 1.89 % 2.56 % 1.38 % yield ^2Average 77.7 % 63.9 % 44.3 % utilization ^3Averagemonthly rental 2.43 % 4.00 % 3.10 % rate ^4

-- 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. -- Average monthly total yield is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment for the period. -- 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. -- 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 RENTCORPBUSINESS SEGMENT DATA (unaudited)Three months ended June 30, 2019(dollar Mobile TRS- Adleramounts in Enviroplex Consolidated thousands) Modular RenTelco Tanks

Revenues Rental $ 44,737 $ 25,489 $ 17,879 $ ? $ 88,105 Rental related 15,901 854 7,712 ? 24,467 servicesRental 60,638 26,343 25,591 ? 112,572 operationsSales 6,725 5,317 593 1,072 13,707 Other 359 650 151 ? 1,160 Total revenues 67,722 32,310 26,335 1,072 127,439 Costs and ExpensesDirect costsof rental operations:Depreciation 5,469 10,164 4,093 ? 19,726 Rental related 11,728 686 5,723 ? 18,137 servicesOther 14,282 4,018 3,441 ? 21,741 Total directcosts of 31,479 14,868 13,257 ? 59,604 rentaloperationsCosts of sales 4,257 2,617 415 665 7,954 Total costs of 35,736 17,485 13,672 665 67,558 revenues Gross Profit Rental 24,986 11,307 10,345 ? 46,638 Rental related 4,173 168 1,989 ? 6,330 servicesRental 29,159 11,475 12,334 ? 52,968 operationsSales 2,468 2,700 178 407 5,753 Other 359 650 151 ? 1,160 Total gross 31,986 14,825 12,663 407 59,881 profitSelling andadministrative 15,677 6,093 7,814 1,231 30,815 expensesIncome (loss)from $ 16,309 $ 8,732 $ 4,849 $ (824 ) 29,066 operationsInterest (3,138 )expenseForeigncurrency 37 exchange gainProvision for (6,477 )income taxesNet income $ 19,488 Other InformationAverage rental $ 786,512 $ 297,379 $ 313,552 equipment ^1Averagemonthly total 1.90 % 2.86 % 1.90 % yield ^2Average 79.2 % 67.2 % 57.5 % utilization ^3Averagemonthly rental 2.39 % 4.25 % 3.31 % rate ^4

-- 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. -- Average monthly total yield is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment for the period. -- 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. -- 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 RENTCORPBUSINESS SEGMENT DATA (unaudited)Six months ended June 30, 2020(dollar Mobile TRS- Adleramounts in Enviroplex Consolidated thousands) Modular RenTelco Tanks

Revenues Rental $ 94,038 $ 53,548 $ 27,549 $ ? $ 175,135 Rental related 32,607 1,496 10,883 ? 44,986 servicesRental 126,645 55,044 38,432 ? 220,121 operationsSales 22,572 11,031 730 10,702 45,035 Other 743 1,067 160 ? 1,970 Total revenues 149,960 67,142 39,322 10,702 267,126 Costs and ExpensesDirect costsof rental operations:Depreciation 11,406 23,582 8,233 ? 43,221 Rental related 23,712 1,163 8,282 ? 33,157 servicesOther 24,993 7,942 4,683 ? 37,618 Total directcosts of 60,111 32,687 21,198 ? 113,996 rentaloperationsCosts of sales 15,548 5,497 548 6,649 28,242 Total costs of 75,659 38,184 21,746 6,649 142,238 revenues Gross Profit Rental 57,638 22,024 14,633 ? 94,295 Rental related 8,895 333 2,601 ? 11,829 servicesRental 66,533 22,357 17,234 ? 106,124 operationsSales 7,024 5,534 182 4,053 16,793 Other 744 1,067 160 ? 1,971 Total gross 74,301 28,958 17,576 4,053 124,888 profitSelling andadministrative 34,275 12,236 13,177 2,806 62,494 expensesIncome from $ 40,026 $ 16,722 $ 4,399 $ 1,247 62,394 operationsInterest (4,836 )expenseForeigncurrency (319 )exchange lossProvision for (14,531 )income taxesNet income $ 42,708 Other InformationAverage rental $ 819,212 $ 338,066 $ 314,823 equipment ^1Averagemonthly total 1.90 % 2.64 % 1.46 % yield ^2Average 78.2 % 64.7 % 45.9 % utilization ^3Averagemonthly rental 2.45 % 4.08 % 3.18 % rate ^4

-- 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. -- Average monthly total yield is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment for the period. -- 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. -- 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 RENTCORPBUSINESS SEGMENT DATA (unaudited)Six months ended June 30, 2019(dollar Mobile TRS- Adleramounts in Enviroplex Consolidated thousands) Modular RenTelco Tanks

Revenues Rental $ 86,998 $ 49,112 $ 34,691 $ ? $ 170,801 Rental related 30,372 1,562 13,988 ? 45,922 servicesRental 117,370 50,674 48,679 ? 216,723 operationsSales 14,725 11,067 863 3,877 30,532 Other 719 1,245 228 ? 2,192 Total revenues 132,814 62,986 49,770 3,877 249,447 Costs and ExpensesDirect costsof rental operations:Depreciation 10,877 19,684 8,126 ? 38,687 Rental related 22,655 1,313 10,532 ? 34,500 servicesOther 26,917 8,118 6,439 ? 41,474 Total directcosts of 60,449 29,115 25,097 ? 114,661 rentaloperationsCosts of sales 9,500 5,379 587 2,434 17,900 Total costs of 69,949 34,494 25,684 2,434 132,561 revenues Gross Profit Rental 49,204 21,310 20,126 ? 90,640 Rental related 7,717 249 3,456 ? 11,422 servicesRental 56,921 21,559 23,582 ? 102,062 operationsSales 5,225 5,688 276 1,443 12,632 Other 719 1,245 228 ? 2,192 Total gross 62,865 28,492 24,086 1,443 116,886 profitSelling andadministrative 31,047 12,063 14,894 2,506 60,510 expensesIncome (loss)from $ 31,818 $ 16,429 $ 9,192 $ (1,063 ) 56,376 operationsInterest (6,246 )expenseForeigncurrency 86 exchange gainProvision for (12,279 )income taxesNet income $ 37,937 Other InformationAverage rental $ 782,562 $ 291,590 $ 313,032 equipment ^1Averagemonthly total 1.85 % 2.81 % 1.85 % yield ^2Average 79.1 % 65.7 % 57.1 % utilization ^3Averagemonthly rental 2.34 % 4.27 % 3.23 % rate ^4

-- 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. -- Average monthly total yield is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment for the period. -- 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. -- 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 Companys 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 Companys liquidity and financial condition and because management, as well as the Companys 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 Companys period-to-period operating performance, compliance with financial covenants in the Companys revolving lines of credit and senior notes and the Companys 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 Companys 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 Companys 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 Companys 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 Companys 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 Companys 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 Companys 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 Companys 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 Three Months Ended Six Months Ended Twelve Months Endedamounts in thousands) June 30, June 30, June 30,

2020 2019 2020 2019 2020 2019 Net income $ 22,549 $ 19,488 $ 42,708 $ 37,937 $ 101,577 $ 86,965 Provisionfor income 8,076 6,477 14,531 12,279 34,571 27,822 taxesInterest 2,184 3,138 4,836 6,246 10,921 12,552 expenseDepreciationand 23,801 21,987 47,663 43,087 94,052 84,774 amortizationEBITDA 56,610 51,090 109,738 99,549 241,121 212,113 Share-based 1,501 1,354 3,224 2,746 6,370 5,029 compensationAdjusted $ 58,111 $ 52,444 $ 112,962 $ 102,295 $ 247,491 $ 217,142 EBITDA ^1AdjustedEBITDA 42 % 41 % 42 % 41 % 42 % 41 %margin ^2

Reconciliation of Adjusted EBITDA to Net Cash Provided by Operating Activities

(dollar Three Months Ended Six Months Ended Twelve Months Endedamounts in thousands) June 30, June 30, June 30,

2020 2019 2020 2019 2020 2019 Adjusted $ 58,111 $ 52,444 $ 112,962 $ 102,295 $ 247,491 $ 217,142 EBITDA ^1Interest (2,172 ) (3,382 ) (5,031 ) (6,210 ) (11,296 ) (12,685 )paidIncome taxespaid, net of (1,790 ) (5,463 ) (2,153 ) (6,173 ) (13,508 ) (12,655 )refundsreceivedGain on saleof used (4,814 ) (4,553 ) (9,602 ) (9,168 ) (21,743 ) (18,852 )rentalequipmentForeigncurrency (117 ) (37 ) 319 (86 ) 321 27 exchangeloss (gain)Amortizationof debt 2 2 5 5 11 10 issuancecostChange incertain assets andliabilities:Accountsreceivable, (106 ) (1,615 ) 2,159 (2 ) (4,149 ) (15,923 )netPrepaidexpenses and (2,004 ) (9,726 ) (1,641 ) (21,246 ) 6,075 (15,659 )other assetsAccountspayable and 5,858 9,380 (5,311 ) 15,663 (3,717 ) 17,171 otherliabilitiesDeferred (1,128 ) 8,431 5,815 16,909 (5,956 ) 22,313 incomeNet cashprovided by $ 51,840 $ 45,481 $ 97,522 $ 91,987 $ 193,529 $ 180,889 operatingactivities

-- Adjusted EBITDA is defined as net income before interest expense, provision for income taxes, depreciation, amortization and share-based compensation. -- 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