Business Wire | Apr 28, 2021 04:01PM EDT

McGrath RentCorp Announces Results for First Quarter 2021

Apr. 28, 2021

LIVERMORE, Calif.--(BUSINESS WIRE)--Apr. 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:

* Rental revenues decreased 4% year-over-year to $86.1 million. * Total revenues decreased 6% year-over-year to $121.2 million. * Adjusted EBITDA1 decreased $5.7 million to $49.1 million, which included a $2.1 million non-operating legal expense. * 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.

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:

* Total revenue: $570 million - $610 million * Adjusted EBITDA: $232 million - $247 million * Gross rental equipment capital expenditures: $90 million to $110 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 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)

Three Months Ended March 31,

(in thousands, except per share amounts) 2021 2020

Revenues

Rental $ 86,087 $ 89,506

Rental related services 19,669 24,511

Rental operations 105,756 114,017

Sales 14,611 14,366

Other 828 1,070

Total revenues 121,195 129,453

Costs and Expenses

Direct costs of rental operations:

Depreciation of rental equipment 21,255 21,638

Rental related services 14,604 18,263

Other 19,707 19,453

Total direct costs of rental operations 55,566 59,354

Costs of sales 8,548 8,443

Total costs of revenues 64,114 67,797

Gross profit 57,081 61,656

Selling and administrative expenses 33,137 31,954

Income from operations 23,944 29,702

Other expense:

Interest expense (1,783 ) (2,652 )

Foreign currency exchange loss (55 ) (436 )

Income before provision for income taxes 22,106 26,614

Provision for income taxes 4,708 6,455

Net income $ 17,398 $ 20,159

Earnings per share:

Basic $ 0.72 $ 0.83

Diluted $ 0.71 $ 0.81

Shares used in per share calculation:

Basic 24,153 24,292

Diluted 24,512 24,738

Cash dividends declared per share $ 0.435 $ 0.420



MCGRATH RENTCORP

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

March 31,

December 31,

(in thousands)

2021

2020

Assets

Cash

$

2,329

$

1,238

Accounts receivable, net of allowance for doubtful accounts of $2,100 in 2021

and 2020

122,208

123,316

Rental equipment, at cost:

Relocatable modular buildings

886,299

882,115

Electronic test equipment

342,105

333,020

Liquid and solid containment tanks and boxes

314,444

315,706

1,542,848

1,530,841

Less accumulated depreciation

(606,905

)

(592,725

)

Rental equipment, net

935,943

938,116

Property, plant and equipment, net

135,034

136,210

Prepaid expenses and other assets

41,643

41,549

Intangible assets, net

7,069

7,118

Goodwill

28,197

28,197

Total assets

$

1,272,423

$

1,275,744

Liabilities and Shareholders' Equity

Liabilities:

Notes payable

$

208,806

$

222,754

Accounts payable and accrued liabilities

112,551

108,334

Deferred income

50,562

45,975

Deferred income taxes, net

212,819

216,077

Total liabilities

584,738

593,140

Shareholders' equity:

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

Issued and outstanding - 24,206 shares as of March 31, 2021 and 24,128 shares as of December 31, 2020

104,584

106,289

Retained earnings

583,167

576,419

Accumulated other comprehensive loss

(66

)

(104

)

Total shareholders' equity

687,685

682,604

Total liabilities and shareholders' equity

$

1,272,423

$

1,275,744

MCGRATH RENTCORP

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

March 31, December 31,

(in thousands) 2021 2020

Assets

Cash $ 2,329 $ 1,238

Accounts receivable, net of allowance fordoubtful accounts of $2,100 in 2021 122,208 123,316

and 2020

Rental equipment, at cost:

Relocatable modular buildings 886,299 882,115

Electronic test equipment 342,105 333,020

Liquid and solid containment tanks and boxes 314,444 315,706

1,542,848 1,530,841

Less accumulated depreciation (606,905 ) (592,725 )

Rental equipment, net 935,943 938,116

Property, plant and equipment, net 135,034 136,210

Prepaid expenses and other assets 41,643 41,549

Intangible assets, net 7,069 7,118

Goodwill 28,197 28,197

Total assets $ 1,272,423 $ 1,275,744

Liabilities and Shareholders' Equity

Liabilities:

Notes payable $ 208,806 $ 222,754

Accounts payable and accrued liabilities 112,551 108,334

Deferred income 50,562 45,975

Deferred income taxes, net 212,819 216,077

Total liabilities 584,738 593,140

Shareholders' equity:

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

Issued and outstanding - 24,206 shares as ofMarch 31, 2021 and 24,128 shares as of December 104,584 106,289 31, 2020

Retained earnings 583,167 576,419

Accumulated other comprehensive loss (66 ) (104 )

Total shareholders' equity 687,685 682,604

Total liabilities and shareholders' equity $ 1,272,423 $ 1,275,744



MCGRATH RENTCORP

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

Three Months Ended March 31,

(in thousands)

2021

2020

Cash Flows from Operating Activities:

Net income

$

17,398

$

20,159

Adjustments to reconcile net income to net cash provided by

operating activities:

Depreciation and amortization

23,460

23,862

Provision for doubtful accounts

99

552

Share-based compensation

1,777

1,723

Gain on sale of used rental equipment

(4,794

)

(4,788

)

Foreign currency exchange loss

55

436

Amortization of debt issuance costs

3

3

Change in:

Accounts receivable

1,009

1,713

Prepaid expenses and other assets

(94

)

363

Accounts payable and accrued liabilities

(2,633

)

(6,383

)

Deferred income

4,587

6,943

Deferred income taxes

(3,258

)

1,099

Net cash provided by operating activities

37,609

45,682

Cash Flows from Investing Activities:

Purchases of rental equipment

(17,984

)

(35,374

)

Purchases of property, plant and equipment

(981

)

(3,196

)

Proceeds from sales of used rental equipment

10,418

10,356

Net cash used in investing activities

(8,547

)

(28,214

)

Cash Flows from Financing Activities:

Net repayment under bank lines of credit

(13,931

)

(1,890

)

Repurchase of common stock

-

(7,852

)

Taxes paid related to net share settlement of stock awards

(3,482

)

(401

)

Payment of dividends

(10,554

)

(9,369

)

Net cash used in financing activities

(27,967

)

(19,512

)

Effect of foreign currency exchange rate changes on cash

(4

)

44

Net (decrease) increase in cash

1,091

(2,000

)

Cash balance, beginning of period

1,238

2,342

Cash balance, end of period

$

2,329

$

342

Supplemental Disclosure of Cash Flow Information:

Interest paid, during the period

$

1,625

$

2,859

Net income taxes paid, during the period

$

372

$

363

Dividends accrued during the period, not yet paid

$

9,810

$

10,218

Rental equipment acquisitions, not yet paid

$

11,095

$

6,537

MCGRATH RENTCORP

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

Three Months Ended March 31,

(in thousands) 2021 2020

Cash Flows from Operating Activities:

Net income $ 17,398 $ 20,159

Adjustments to reconcile net income to net cashprovided by

operating activities:

Depreciation and amortization 23,460 23,862

Provision for doubtful accounts 99 552

Share-based compensation 1,777 1,723

Gain on sale of used rental equipment (4,794 ) (4,788 )

Foreign currency exchange loss 55 436

Amortization of debt issuance costs 3 3

Change in:

Accounts receivable 1,009 1,713

Prepaid expenses and other assets (94 ) 363

Accounts payable and accrued liabilities (2,633 ) (6,383 )

Deferred income 4,587 6,943

Deferred income taxes (3,258 ) 1,099

Net cash provided by operating activities 37,609 45,682

Cash Flows from Investing Activities:

Purchases of rental equipment (17,984 ) (35,374 )

Purchases of property, plant and equipment (981 ) (3,196 )

Proceeds from sales of used rental equipment 10,418 10,356

Net cash used in investing activities (8,547 ) (28,214 )

Cash Flows from Financing Activities:

Net repayment under bank lines of credit (13,931 ) (1,890 )

Repurchase of common stock - (7,852 )

Taxes paid related to net share settlement of (3,482 ) (401 )stock awards

Payment of dividends (10,554 ) (9,369 )

Net cash used in financing activities (27,967 ) (19,512 )

Effect of foreign currency exchange rate changes (4 ) 44 on cash

Net (decrease) increase in cash 1,091 (2,000 )

Cash balance, beginning of period 1,238 2,342

Cash balance, end of period $ 2,329 $ 342

Supplemental Disclosure of Cash Flow Information:

Interest paid, during the period $ 1,625 $ 2,859

Net income taxes paid, during the period $ 372 $ 363

Dividends accrued during the period, not yet paid $ 9,810 $ 10,218

Rental equipment acquisitions, not yet paid $ 11,095 $ 6,537



MCGRATH RENTCORP

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

%

MCGRATH RENTCORP

BUSINESSSEGMENT DATA (unaudited)

Three monthsended March 31, 2021

(dollar Mobile TRS Adleramounts in Modular RenTelco Tanks Enviroplex Consolidated thousands)

Revenues

Rental $ 46,657 $ 27,276 $ 12,154 $ - $ 86,087

Rental related 14,051 740 4,878 - 19,669 services

Rental 60,708 28,016 17,032 - 105,756 operations

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 costsof rental operations:

Depreciation 5,819 11,362 4,074 - 21,255

Rental related 10,072 653 3,879 - 14,604 services

Other 12,875 4,534 2,298 - 19,707

Total directcosts of 28,766 16,549 10,251 - 55,566 rentaloperations

Costs of sales 4,948 2,301 416 883 8,548

Total costs of 33,714 18,850 10,667 883 64,114 revenues



Gross Profit

Rental 27,963 11,380 5,782 - 45,125

Rental related 3,979 87 999 - 5,065 services

Rental 31,942 11,467 6,781 - 50,190 operations

Sales 2,672 2,848 192 351 6,063

Other 320 438 70 - 828

Total gross 34,934 14,753 7,043 351 57,081 profit

Selling andadministrative 19,237 6,298 6,267 1,335 33,137 expenses

Income (loss)from $ 15,697 $ 8,455 $ 776 $ (984 ) $ 23,944 operations

Interest (1,783 )expense

Foreigncurrency (55 )exchange loss

Provision for (4,708 )income taxes

Net income $ 17,398



Other Information

Average rental $ 836,893 $ 334,781 $ 313,873 equipment ^1

Averagemonthly total 1.86 % 2.72 % 1.29 % yield ^2

Average 75.8 % 68.1 % 40.3 % utilization ^3

Averagemonthly rental 2.45 % 3.99 % 3.21 % rate ^4

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.

Average rental equipment represents the cost of rental equipment, excluding1. 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.

Average utilization is calculated by dividing the average month end costs of3. rental equipment on rent by the average month end total costs of rental equipment.

Average monthly rental rate is calculated by dividing the averages of4. 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

%

MCGRATH RENTCORP

BUSINESSSEGMENT DATA (unaudited)

Three monthsended March 31, 2020

(dollar Mobile TRS Adleramounts in Modular RenTelco Tanks Enviroplex Consolidated thousands)

Revenues

Rental $ 47,410 $ 27,536 $ 14,560 $ - $ 89,506

Rental related 18,144 826 5,541 - 24,511 services

Rental 65,554 28,362 20,101 - 114,017 operations

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 costsof rental operations:

Depreciation 5,669 11,832 4,137 - 21,638

Rental related 13,350 646 4,267 - 18,263 services

Other 12,617 4,380 2,456 - 19,453

Total directcosts of 31,636 16,858 10,860 - 59,354 rentaloperations

Costs of sales 4,703 2,448 320 972 8,443

Total costs of 36,339 19,306 11,180 972 67,797 revenues



Gross Profit

Rental 29,124 11,324 7,967 - 48,415

Rental related 4,794 180 1,274 - 6,248 services

Rental 33,918 11,504 9,241 - 54,663 operations

Sales 2,553 2,661 178 531 5,923

Other 388 592 90 - 1,070

Total gross 36,859 14,757 9,509 531 61,656 profit

Selling andadministrative 17,418 6,361 6,824 1,351 31,954 expenses

Income (loss)from $ 19,441 $ 8,396 $ 2,685 $ (820 ) 29,702 operations

Interest (2,652 )expense

Foreigncurrency (436 )exchange gain

Provision for (6,455 )income taxes

Net income $ 20,159



Other Information

Average rental $ 815,686 $ 337,907 $ 314,812 equipment ^1

Averagemonthly total 1.94 % 2.72 % 1.54 % yield ^2

Average 78.7 % 65.3 % 47.8 % utilization ^3

Averagemonthly rental 2.46 % 4.16 % 3.23 % rate ^4

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

Average rental equipment represents the cost of rental equipment, excluding1. 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.

Average utilization is calculated by dividing the average month end costs of3. rental equipment on rent by the average month end total costs of rental equipment.

Average monthly rental rate is calculated by dividing the averages of4. 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 Three Months Ended Twelve Months Ended thousands) March 31, 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 23,460 23,862 94,241 92,238 amortization

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 Three Months Ended Twelve Months Ended thousands) March 31, 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 (372 ) (363 ) (34,912 ) (17,181 )refunds received

Gain on sale of used (4,794 ) (4,788 ) (19,335 ) (21,482 )rental equipment

Foreign currency exchange 55 436 (459 ) 401 loss (gain)

Amortization of debt 3 3 11 11 issuance costs

Change in certain assets and liabilities:

Accounts receivable, net 1,108 2,265 3,626 (5,658 )

Prepaid expenses and (94 ) 363 3,350 (1,647 )other assets

Accounts payable and (10,385 ) (11,169 ) 4,013 (195 )other liabilities

Deferred income 4,587 6,943 (11,345 ) 3,603

Net cash provided by $ 37,609 $ 45,682 $ 172,431 $ 187,170 operating activities



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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210428005843/en/

CONTACT: Keith E. Pratt EVP & Chief Financial Officer 925-606-9200