Mcgrath Rentcorp · NASDAQ:MGRC
Mcgrath Rentcorp — Q1 2023 Earnings Presentation
39 slides from Mcgrath Rentcorp's earnings presentation, May 5, 2023
Slide 1: Q1 2023 Quarterly Investor Presentation
MAY 5, 2023 Q1 2023 Quarterly Investor Presentation
Slide 2: Safe Harbor
Safe Harbor Statements contained in this presentation 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’s (the “Company’s”) expectation
Slide 3: Focusing the Portfolio on Mobile Modular
Focusing the Portfolio on Mobile Modular PAGE 3
Slide 4: Focusing the Portfolio on Modular Through Simultaneous Acquisition of Vesta and Divestiture of Adler
Announced on February 1, 2023 - Focusing the Portfolio on Modular Through Simultaneous Acquisition of Vesta and Divestiture of Adler Accelerates McGrath’s strategic growth priorities by increasing exposure to the modular business Creates a more competitive and larger scaled modular business with inc
Slide 5: Transaction Significantly Focuses the Portfolio and Scales the Mobile Modular Business
Transaction Significantly Focuses the Portfolio and Scales the Mobile Modular Business. For additional information on the transaction refer to the February 1, 2023 transaction presentation ✓ Mobile Modular segment’s high EBITDA margins, recurring revenue, and Adler favorable demand make it TRS 13% a
Slide 6: Vesta Modular Overview
Vesta Modular Overview BUSINESS OVERVIEW Vesta is a provider of temporary and permanent modular space solutions, and facilitates modular building processes including design, construction, and installation of projects $129M ~6,000 2022E Revenues Total Units Scope of business includes both modular spa
Slide 7: Mobile Modular + Vesta Geographic Coverage
Mobile Modular + Vesta Geographic Coverage Expands footprint with strategically located assets 13 States with New Geographic Coverage 15 States with Increased Geographic Density PAGE7
Slide 8: McGrath Overview
McGrath Overview ie: McGRATH
Slide 9: Uniquely McGrath
Uniquely McGrath B2B Rentals Modulars and Dividend Investor Focus Electronics Champion Shareholder 32 Years of Return CAGR 16%(c) Consecutive Increases Revenue North America $734M Focus Adjusted 99% of EBITDA $289M(a) (b) Total Revenues Diverse Customer Base Strong Service ~23,000 Customers Corporat
Slide 10: McGrath Snapshot
McGrath Snapshot Total Revenues (Q1-23) TOTAL REVENUES (Q1-23) MARKET CAP (2) 22% $164M ~$2.2B DIVERSE CUSTOMER BASE EMPLOYEES ~23,000 ~1,200 78% (1) Mobile Modular TRS-RenTelco (1) Mobile Modular includes Mobile Modular Portable Storage, Kitchens To Go, and Enviroplex (2) As of 5/1/23 PAGE 10
Slide 11: Modular Buildings and Storage Containers
Modular Buildings and Storage Containers QUARTERLY REVENUES (Q1-23) $127M RENTAL EQUIPMENT (AT 03/31/23 OAC(1)) POSITIONING: Leader in California Texas, Florida, and Mid-Atlantic education markets $1,412M PRODUCTS: Office buildings and complexes, classrooms, portable storage containers RENTAL FLEET
Slide 12: Electronic Test Equipment
Electronic Test Equipment QUARTERLY REVENUES (Q1-23) $36M RENTAL EQUIPMENT (AT 03/31/23 OAC(1)) POSITIONING: $402M Leader in North Americas PRODUCTS: RENTAL FLEET (units) 26,000 General purpose and communications test equipment ~ COVERAGE: Serving customers in North America and selectively overseas
Slide 13: Company Priorities
Company Priorities STRATEGIC GROWTH: Centered on largest business segment – Modulars Increasing geographic coverage Wider services solutions to customers – Custom Modular Solutions, Site Related Services, Mobile Modular Plus DISCIPLINED CAPITAL ALLOCATION: Strong balance sheet and cash flow generati
Slide 14: Corporate Responsibility & Values
Corporate Responsibility & Values We take corporate social responsibility and fundamental good corporate citizenship seriously at McGrath Visit our new corporate responsibility site for additional environmental sustainability, social responsibility and governance (ESG) information: https://investors
Slide 15: McGrath Historic Operating Results
McGrath Historic Operating Results (a) Total Revenues Adjusted EBITDA(b) $800 734 $350 617 289 570 573 155 $300 249 $600 237 241 498 129 $250 115 128 579 203 97 $200 $400 455 444 488 402 $150 41% 42% 42% 40% 39% of total 79% of total revenue 81% 80% 78% 79% revenue $200 $100 $50 $0 $0 2018 2019 2020
Slide 16: Rental Segment Adjusted EBITDA
Rental Segment Adjusted EBITDA(a) Mobile Modular(b) TRS-RenTelco $175 159 $175 $150 $150 130 119 $125 $125 108 90 86 92 $100 $100 80 85 69 $75 $75 $50 34% of total $50 58% 61% 60% 61% 61% of total 36% revenue revenue 36% 37% $25 35% $25 $0 $0 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 (a) Adj
Slide 17: Q1 2023 Company Highlights
Q1 2023 Company Highlights Transformative quarter at McGrath: • Acquired Vesta Modular - A strategic target • Divested Adler Tank Rentals – A non-core asset • Portable Storage tuck-ins – Brekke Storage and Dixie Temporary Storage Well positioned for future business growth in 2023 Raised 2023 full ye
Slide 18: Financial Highlights
Financial Highlights PAGE 18
Slide 19: Q1 2023 Quarterly Highlights (continuing operations)
Q1 2023 Quarterly Highlights (continuing operations) Strong McGrath results reflecting broad based demand and good execution • Total revenues $163.7M (+31%) • Adjusted EBITDA $61.8M (+23%) Each rental segment achieved robust increases in both rental operations and sales revenues (year over year) • M
Slide 20: Operating Results (from continuing operations)
Operating Results (from continuing operations) Three months ended March 31 2023 2022 Change Rental Revenue 110.2 90.1 22% Rental Related Services 27.1 19.0 43% Sales 23.7 15.2 55% Total Revenue 163.7 125.1 31% Gross Profit 77.4 58.0 33% (a) Adjusted EBITDA 61.8 50.1 23% (a) Adjusted EBITDA defined o
Slide 21: Rental Revenue Quarterly Comparison (2022 – 2023)
Rental Revenue (from continuing operations) Quarterly Comparison (2022 – 2023) Mobile Modular(a) TRS-RenTelco MGRC +32% $100 $100 $160 +22% 81.1 $80 72.7 61.5 64.9 69.1 $80 $120 110.2 104.1 +2% 94.6 100.9 90.1 $60 $60 $80 $40 $40 28.5 29.1 29.7 31.8 31.4 $20 $20 $40 $0 $0 $0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Slide 22: Adjusted EBITDA Quarterly Comparison (2022 – 2023)
Adjusted EBITDA(a) (from continuing operations) Quarterly Comparison (2022 – 2023) Mobile Modular – Adjusted EBITDA(b) TRS-RenTelco – Adjusted EBITDA MGRC – Adjusted EBITDA $60 +40% 53.1 $60 $100 +23% 78.8 $50 42.4 39.9 $50 $80 35.8 +0% 61.8 64.7 $40 $40 57.7 30.4 $60 50.0 $30 $30 23.9 25.3 20.7 20.
Slide 23: 2023 Financial Outlook
2023 Financial Outlook Previous (2/22/23) 2023 Outlook (as of 5/4/23) (Continuing Operations) Total Revenues $780M to $810M $790M to $820M Adjusted EBITDA (a) $294M to $309M $300M to $315M Gross Rental Equipment Capital $190M to $210M $190M to $210M Expenditures (a) Adjusted EBITDA defined on page 1
Slide 24: Rental Segment Highlights
Rental Segment Highlights PAGE 24
Slide 25: Mobile Modular
Mobile Modular 2s McGRATH mobile mobile KITCHENS TO GO" mobile p modular B yack tr Portable PAGE 25
Slide 26: Rental Assets
Rental Assets mobile modular ¥ ’ ry ; = a al | mn q sat 2— McGRATH
Slide 27: Mobile Modular Operating Results
Mobile Modular Operating Results(a)(b) Total Revenues Rental Gross Profit Adjusted EBITDA $500 462 $160 154 $180 of rental 159 $140 132 57% $160 of total 22% revenue revenue $400 363 34% $120 118 60% $140 130 322 109 119 301 19% %s of total 95 63% $120 108 36% 20% $100 60% $300 255 20% revenue 37% 1
Slide 28: Mobile Modular Highlights
Mobile Modular Highlights(a)(b) Rental Revenue Period End Rental Equipment (Original Cost) Average Utilization $90 $1,400 1,306 100.0% 81.1 $80 81.2% 72.7 $1,200 79.6% 80.1% 69.1 80.0% 77.1% 78.1% $70 64.9 1,014 1,026 1,037 1,055 61.5 $1,000 $60 60.0% $50 $800 $40 $600 40.0% $30 $400 $20 20.0% $200
Slide 29: Mobile Modular Highlights
Mobile Modular Highlights Adjusted EBITDA(a) Adjusted EBITDA(a) % of Total Revenue Average Rental Rate(b) $60 50% 3.00% 2.89% 2.86% 2.72% 2.79% 53.1 2.64% $50 40% 40% 42.4 39.9 34% 34% 32% 32% $40 35.8 2.00% 30% 30.4 $30 20% $20 1.00% 10% $10 $0 0% 0.00% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2022 2023
Slide 30: Modular Buildings and Storage Containers Growth Opportunities
Modular Buildings and Storage Containers Growth Opportunities Strategic geographic footprint - Multiple attractive regions with established market position and long-term growth opportunities – CA, FL, TX, Mid Atlantic Industry - Leading position in education rentals Regional expansion opportunities
Slide 31: TRS-RenTelco
TRS-RenTelco ie: McGRATH
Slide 32: Rental Assets
Rental Assets Rental and Sales of General Purpose and Communications Test Equipment PAGE 32
Slide 33: TRS-RenTelco Operating Results
TRS-RenTelco Operating Results(a) Total Revenues Rental Gross Profit Adjusted EBITDA $200 $60 $100 92 51 85 86 151 47 80 61% of total 141 140 45 45 42% of rental $80 60% 61% revenue $150 131 41% revenue 69 61% $40 39 44% 42% 119 of total $60 58% 44% 80% revenue $100 77% 81% 79% 76% $40 $20 $50 $20 $
Slide 34: TRS-RenTelco Highlights
TRS-RenTelco Highlights(a) Rental Revenue Period End Rental Equipment (Original Cost) Average Utilization $40 $500 100.0% 31.8 31.4 29.7 398 387 393 395 $30 28.5 29.1 $400 374 80.0% 63.4% 64.5% 65.3% 63.0% 59.2% $300 60.0% $20 $200 40.0% $10 $100 20.0% $0 $0 0.0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Slide 35: TRS-RenTelco Highlights
TRS-RenTelco Highlights Adjusted EBITDA(a) Adjusted EBITDA(a) % of Total Revenue Average Rental Rate(b) $30 70% 6.00% 62% 62% 61% 25.3 59% 23.9 60% 57% $25 5.00% 22.1 4.14% 20.7 20.6 4.01% 4.02% 4.16% 4.20% 50% $20 4.00% 40% $15 3.00% 30% $10 2.00% 20% $5 10% 1.00% $0 0% 0.00% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q
Slide 36: TRS-RenTelco Growth Opportunities
TRS-RenTelco Growth Opportunities North American market leader in general purpose and communications equipment rentals Highly diversified end markets and customer base with positive demand trends Positive demand outlook for technology-related end markets driven by new technologies in almost all our
Slide 37: Investment Summary
Investment Summary McGrath (Nasdaq: MGRC) Established rental businesses with solid market positions Strategic growth focus on Modular segment Disciplined capital spending on new rental equipment and acquisitions Strong cash flow and resilient business model Dividend increases for 32 consecutive year
Slide 38: Appendix
Appendix 2s McGRATH
Slide 39: Rental Fleet Metrics
Rental Fleet Metrics (1) Pe r i o d End U ti l i z a ti o n Q1-23 vs. FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 Q121 Q221 Q321 Q421 Q122 Q222 Q322 Q422 Q123 Q4-22 % chg Q1 Y/Y % chg (4) Mobile Modular 66.7% 70.7% 75.0% 76.9% 77.3% 77.8% 79.3% 79.1% 76.0% 76.4% 80.7% 75.8% 76.3% 76.7% 76