McGrath Announces Results for Third Quarter 2024

About this update from Mcgrath Rentcorp

LIVERMORE, Calif. --(BUSINESS WIRE)-- McGrath RentCorp (“McGrath” or the “Company”) (Nasdaq: MGRC), a leading business-to-business rental company in North America , today announced total revenues from continuing operations for the quarter ended September 30, 2024 of $266.8 million , an increase of 10% compared to the third quarter of 2023. The Company reported net income from continuing operations of $149.3 million , or $6.08 per diluted share, for the third quarter of 2024, compared to net income from continuing operations of $40.4 million , or $1.65 per diluted share, for the third quarter of 2023. Excluding the $180.0 million merger termination payment received from WillScot Mobile Mini and $39.4 million in transaction costs incurred during the quarter, net of provision for income taxes, the Company reported net income from continuing operations of $45.9 million , or $1.87 per diluted share. THIRD QUARTER 2024 YEAR-OVER-YEAR COMPANY HIGHLIGHTS (FROM CONTINUING OPERATIONS): Rental revenues increased 1% to $124.2 million . Total revenues increased 10% to $266.8 million . Payment on merger termination from WillScot Mobile Mini provided for $180.0 million in proceeds received by the Company, partly offset by $39.4 million in transaction costs and an increase in provision for income taxes, resulted in a $103.5 million net income contribution during the quarter, or $4.21 per diluted share. Adjusted EBITDA1 increased 13% to $104.0 million . Dividend rate of $0.475 per share for the third quarter 2024. On an annualized basis, this dividend represents a 1.8% yield on the October 23, 2024 close price of $106.23 per share. Joe Hanna , President and CEO of McGrath, made the following comments: “We were very pleased with our third quarter results. The 10% increase in companywide revenues was driven by higher rental operations and sales revenues. Our modular business was the highlight for the quarter, with 9% rental revenue growth. Rental revenues grew across our commercial and education customer bases. We maintained our focus on pricing optimization, rental fleet utilization, and value-added services for our customers. Growth initiatives for Mobile Modular Plus, Site Related Services and new modular equipment sales all continued to show progress. Portable storage demand conditions were weak, resulting in 11% lower rental revenues for the quarter, compared to a year ago. The weaker demand was broad-based across regions and was primarily a result of lower commercial construction project activity. TRS-RenTelco experienced continued demand challenges, resulting in 10% lower rental revenues for the quarter, compared to a year ago. During the quarter we maintained disciplined new equipment capital spending and made progress with reducing the fleet size to better align with demand conditions. I appreciate the strong commitment from the McGrath employee team who maintained their focus on disciplined execution throughout the quarter. Looking ahead, I am excited about our multi-year opportunity to increase our customer base, geographic coverage and value-added service offerings in our Modular and Portable Storage businesses." DIVISION HIGHLIGHTS: All comparisons presented below are for the quarter ended September 30, 2024 to the quarter ended September 30, 2023 unless otherwise indicated. MOBILE MODULAR For the third quarter of 2024, the Company’s Mobile Modular division reported Adjusted EBITDA of $71.4 million , an increase of $13.3 million , or 23%, when compared to the same quarter in 2023. Rental revenues increased 9% to $81.5 million , depreciation expense increased 11% to $10.1 million , and other direct costs decreased 3% to $20.5 million , which resulted in an increase in gross profit on rental revenues of 14% to $50.8 million . Rental related services revenues increased 23% to $42.4 million , primarily attributable to higher delivery and pick-up activities and higher site related services, with associated gross profit increasing 32% to $15.0 million . Sales revenues increased 14% to $66.0 million , primarily from higher new equipment sales. Gross margin on sales was 34% in 2024, compared to 32% in 2023, resulting in a 20% increase in gross profit on sales revenues to $22.4 million . The increase in gross profit on sales was primarily attributed to the higher new sales revenues during the quarter. Selling and administrative expenses increased $2.2 million , or 7%, to $34.0 million . PORTABLE STORAGE For the third quarter of 2024, the Company’s Portable Storage division reported Adjusted EBITDA of $10.8 million , a decrease of $1.3 million , or 10%, when compared to the same quarter in 2023. Rental revenues decreased 11% to $17.0 million , depreciation expense increased 10% to $1.0 million , and other direct costs decreased 38% to $1.3 million , which resulted in a decrease in gross profit on rental revenues of 9% to $14.7 million . Rental related services revenues were $4.4 million and gross profit on rental related services revenues was $0.1 million , which was down from $0.3 million in the third quarter of 2023. Sales revenues increased $0.3 million to $1.4 million , primarily from higher used equipment sales. Gross margin on sales was 36%, compared to 32% in 2023, resulting in a $0.1 million increase in gross profit on sales revenues to $0.5 million . Selling and administrative expenses decreased $1.2 million , or 15%, to $6.8 million during the quarter. TRS-RENTELCO For the third quarter of 2024, the Company’s TRS-RenTelco division reported Adjusted EBITDA of $18.9 million , a decrease of 10%, when compared to the same quarter in 2023. Rental revenues decreased 10% to $25.7 million , depreciation expense decreased 10%, and other direct costs increased 5%, resulting in an 18% decrease in gross profit on rental revenues to $9.4 million . The rental revenue decrease was primarily due to continued weakness in end markets, resulting in lower average rental equipment on rent compared to the prior year. Sales revenues decreased 13% to $7.6 million , primarily due to lower used equipment sales. Gross margin on sales was 52%, compared to 35% in 2023, resulting in a 27% increase in gross profit on sales revenues to $3.9 million . Selling and administrative expenses decreased 5%, to $6.6 million . FINANCIAL OUTLOOK: Based upon the Company's year-to-date results and current outlook for the remainder of the year, for the full-year 2024 the Company expects: (Continuing Operations) • Total revenue: $910 to $920 million • Adjusted EBITDA1, 2: $345 to $351 million • Gross rental equipment capital expenditures: $180 to $190 million 1. Adjusted EBITDA is defined as net income before interest expense, provision for income taxes, depreciation, amortization, non-cash impairment costs, share-based compensation, transaction costs, other income, net and non-operating transactions. 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. Adjusted EBITDA from continuing operations for the quarter ended September 30, 2023 , excludes the income from discontinued operations from the divestiture of Adler Tanks . The gain on merger termination from WillScot Mobile Mini was considered a non-operating transaction and is excluded from Adjusted EBITDA. 2. Information reconciling forward-looking Adjusted EBITDA to the comparable GAAP financial measures is unavailable to the Company without unreasonable effort because certain items required for such reconciliations are outside of the Company’s control and/or cannot be reasonably predicted, such as the provision for income taxes. Therefore, no reconciliation to the most comparable GAAP measures is provided. The Company provides Adjusted EBITDA guidance because it believes that Adjusted EBITDA, when viewed with the Company’s results under GAAP, provides useful information for the reasons noted in the reconciliation of actual Adjusted EBITDA to the most directly comparable GAAP measures at the end of this release. ABOUT MCGRATH: McGrath RentCorp (Nasdaq: MGRC) is a leading business-to-business rental company in North America with a strong record of profitable business growth. Founded in 1979, McGrath’s operations are centered on modular solutions through its Mobile Modular and Mobile Modular Portable Storage businesses. In addition, its TRS-RenTelco business offers electronic test equipment rental solutions. The Company’s rental product offerings and services are part of the circular supply economy, helping customers work more efficiently, and sustainably manage their environmental footprint. With over 40 years of experience, McGrath’s success is driven by a focus on exceptional customer experiences. This focus has underpinned the Company’s long-term financial success and supported over 30 consecutive years of annual dividend increases to shareholders, a rare distinction among publicly listed companies. McGrath is headquartered in Livermore, California . Additional information about McGrath and its businesses is available at mgrc.com and investors.mgrc.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 September 26, 2024 , McGrath RentCorp will host a conference call at 5:00 p.m. Eastern Time ( 2:00 p.m. Pacific Time ) on October 24, 2024 to discuss the third quarter 2024 results. To participate in the teleconference, dial 1-800-245-3047 (in the U.S. ), or 1-203-518-9765 (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 1-800-753-9146 (in the U.S. ), or 1-402-220-2705 (outside the U.S. ). 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, (i) Mr. Hanna’s statements about the Company’s multi-year opportunity to increase its customer base, geographic coverage and value-added service offerings in its Modular and Portable Storage businesses, and (ii) statements regarding the full year 2024 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: health of the education and commercial markets in our modular building division; unforeseen liabilities and integration challenges associated with the Vesta, Brekke Storage, Dixie Storage and Inland Storage acquisitions; any adverse impact of the termination of the merger with WillScot Mobile Mini; competition within the modular business; the activity levels in the semiconductor and general purpose and communications test equipment markets at TRS-RenTelco; the activity levels in commercial construction projects and impact on Portable Storage segment; continued execution of our strategic performance improvement initiatives; our ability to successfully increase prices to offset cost increases; and our ability to effectively manage our rental assets, as well as the other 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 September 30 , Nine Months Ended September 30 , (in thousands, except per share amounts) 2024 2023 2024 2023 Revenues Rental $ 124,203 $ 122,686 $ 365,708 $ 350,773 Rental related services 47,701 40,492 111,640 101,481 Rental operations 171,904 163,178 477,349 452,254 Sales 92,508 77,115 181,992 148,576 Other 2,346 3,213 7,855 9,424 Total revenues 266,758 243,506 667,196 610,254 Costs and Expenses Direct costs of rental operations: Depreciation of rental equipment 21,981 22,069 66,512 66,499 Rental related services 32,439 28,532 78,215 71,625 Other 27,252 28,493 84,182 90,188 Total direct costs of rental operations 81,672 79,094 228,909 228,312 Costs of sales 61,107 52,878 117,625 98,431 Total costs of revenues 142,779 131,972 346,534 326,743 Gross profit 123,979 111,534 320,661 283,511 Expenses: Selling and administrative expenses 49,297 48,508 148,764 153,032 Other income, net — (3,559 ) (9,281 ) (3,559 ) Income from operations 74,682 66,585 181,178 134,038 Interest expense 12,641 11,025 38,383 28,434 Foreign currency exchange (gain) loss (216 ) 42 (53 ) (166 ) Gain on merger termination from WillScot Mobile Mini (180,000 ) — (180,000 ) — WillScot Mobile Mini transaction costs 39,436 — 61,157 — Income from continuing operations before provision for income taxes 202,821 55,518 261,691 105,770 Provision for income taxes from continuing operations 53,504 15,152 68,913 25,934 Income from continuing operations 149,317 40,366 192,778 79,836 Discontinued operations: Income from discontinued operations before provision for income taxes — — — 1,709 Provision for income taxes from discontinued operations — — — 453 Gain on sale of discontinued operations, net of tax — — — 61,513 Income from discontinued operations — — — 62,769 Net income $ 149,317 $ 40,366 $ 192,778 $ 142,605 Earnings per share from continuing operations: Basic $ 6.08 $ 1.65 $ 7.86 $ 3.26 Diluted $ 6.08 $ 1.65 $ 7.85 $ 3.26 Earnings per share from discontinued operations: Basic $ — $ — $ — $ 2.57 Diluted $ — $ — $ — $ 2.56 Earnings per share: Basic $ 6.08 $ 1.65 $ 7.86 $ 5.83 Diluted $ 6.08 $ 1.65 $ 7.85 $ 5.81 Shares used in per share calculation: Basic 24,551 24,487 24,538 24,461 Diluted 24,567 24,525 24,564 24,527 Cash dividends declared per share $ 0.475 $ 0.465 $ 1.425 $ 1.395 MCGRATH RENTCORP CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) September 30 , December 31 , (in thousands) 2024 2023 Assets Cash $ 4,056 $ 877 Accounts receivable, net of allowance for credit losses of $2,866 at September 30, 2024 and $2,801 at December 31, 2023 224,529 227,368 Rental equipment, at cost: Relocatable modular buildings 1,398,422 1,291,093 Portable storage containers 241,620 236,123 Electronic test equipment 356,979 377,587 1,997,021 1,904,803 Less: accumulated depreciation (605,339 ) (575,480 ) Rental equipment, net 1,391,682 1,329,323 Property, plant and equipment, net 195,593 169,114 Inventories 22,285 15,425 Prepaid expenses and other assets 67,376 87,364 Intangible assets, net 56,891 64,588 Goodwill 323,224 323,224 Total assets $ 2,285,636 $ 2,217,283 Liabilities and Shareholders' Equity Liabilities: Notes payable $ 608,562 $ 762,975 Accounts payable 76,240 58,760 Accrued liabilities 109,367 108,763 Deferred income 123,925 111,428 Deferred income taxes, net 273,482 241,555 Total liabilities 1,191,576 1,283,481 Shareholders’ equity: Common stock, no par value - Authorized 40,000 shares Issued and outstanding - 24,551 shares as of September 30, 2024 and 24,496 shares as of December 31, 2023 113,989 111,122 Retained earnings 980,244 822,796 Accumulated other comprehensive loss (173 ) (116 ) Total shareholders’ equity 1,094,060 933,802 Total liabilities and shareholders’ equity $ 2,285,636 $ 2,217,283 MCGRATH RENTCORP CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Nine Months Ended September 30 , (in thousands) 2024 2023 Cash Flows from Operating Activities: Net income $ 192,778 $ 142,605 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 80,824 81,842 Deferred income taxes 31,927 (30,018 ) Provision for credit losses 1,437 1,794 Share-based compensation 6,949 5,273 Gain on sale of property, plant and equipment (9,281 ) (3,559 ) Gain on sale of discontinued operations — (61,513 ) Gain on sale of used rental equipment (25,185 ) (22,964 ) Foreign currency exchange gain (53 ) (166 ) Amortization of debt issuance costs 6 6 Change in: Accounts receivable 1,402 (27,733 ) Inventories (6,860 ) (1,988 ) Prepaid expenses and other assets 19,988 (5,402 ) Accounts payable 30,562 22,513 Accrued liabilities 605 10,305 Deferred income 12,497 7,908 Net cash provided by operating activities 337,596 118,903 Cash Flows from Investing Activities: Proceeds from sale of discontinued operations — 268,012 Purchases of rental equipment (167,269 ) (171,322 ) Purchases of property, plant and equipment (36,070 ) (16,448 ) Cash paid for acquisition of businesses — (458,315 ) Cash paid for acquisition of business assets — (3,474 ) Proceeds from sales of used rental equipment 50,270 49,405 Proceeds from sales of property, plant and equipment 12,251 595 Net cash used in investing activities (140,818 ) (331,547 ) Cash Flows from Financing Activities: Net (payments) borrowings under bank lines of credit (154,420 ) 178,892 Borrowings under term note agreement — 75,000 Taxes paid related to net share settlement of stock awards (4,082 ) (6,100 ) Payment of dividends (35,097 ) (34,168 ) Net cash (used in) provided by financing activities (193,599 ) 213,624 Effect of foreign currency exchange rate changes on cash — 9 Net increase in cash 3,179 989 Cash balance, beginning of period 877 957 Cash balance, end of period $ 4,056 $ 1,946 Supplemental Disclosure of Cash Flow Information: Gain on merger termination, net of transaction costs, presented under net cash provided by operating activities $ 118,843 $ — Interest paid, during the period $ 40,338 $ 27,818 Net income taxes (refunded) paid, during the period $ (3,826 ) $ 9,547 Dividends accrued during the period, not yet paid $ 12,241 $ 12,014 Rental equipment acquisitions, not yet paid $ 3,333 $ 5,765 MCGRATH RENTCORP BUSINESS SEGMENT DATA (unaudited) Three months ended September 30, 2024 (dollar amounts in thousands) Mobile Modular Portable Storage TRS-RenTelco Enviroplex Consolidated Revenues Rental $ 81,508 $ 17,040 $ 25,655 $ — $ 124,203 Rental related services 42,396 4,405 900 — 47,701 Rental operations 123,904 21,445 26,555 — 171,904 Sales 65,994 1,411 7,604 17,499 92,508 Other 1,509 195 642 — 2,346 Total revenues 191,407 23,051 34,801 17,499 266,758 Costs and Expenses Direct costs of rental operations: Depreciation 10,124 1,006 10,851 — 21,981 Rental related services 27,366 4,280 793 — 32,439 Other 20,549 1,327 5,376 — 27,252 Total direct costs of rental operations 58,039 6,613 17,020 — 81,672 Costs of sales 43,595 906 3,688 12,918 61,107 Total costs of revenues 101,634 7,519 20,708 12,918 142,779 Gross Profit Rental 50,835 14,707 9,428 — 74,970 Rental related services 15,030 125 107 — 15,262 Rental operations 65,865 14,832 9,535 — 90,232 Sales 22,399 505 3,916 4,581 31,401 Other 1,509 195 642 — 2,346 Total gross profit 89,773 15,532 14,093 4,581 123,979 Selling and administrative expenses 6 34,028 6,790 6,627 1,851 49,296 Other income — — — — — Income from operations $ 55,745 $ 8,742 $ 7,466 $ 2,730 74,683 Interest expense (12,641 ) Foreign currency exchange gain 216 Gain on merger termination from WillScot Mobile Mini 180,000 WillScot Mobile Mini transaction costs (39,436 ) Provision for income taxes (53,504 ) Net income $ 149,317 Other Information Adjusted EBITDA 1 $ 71,420 $ 10,796 $ 18,945 $ 2,822 $ 103,983 Average rental equipment 2 $ 1,240,950 $ 229,231 $ 362,431 Average monthly total yield 3 2.19 % 2.48 % 2.36 % Average utilization 4 77.1 % 62.8 % 57.3 % Average monthly rental rate 5 2.84 % 3.94 % 4.12 % 1. Adjusted EBITDA is defined as net income before interest expense, provision for income taxes, depreciation, amortization, non-cash impairment costs, share-based compensation, transaction costs and other income, net. 2. Average rental equipment represents the cost of rental equipment, excluding new equipment inventory and accessory equipment. 3. Average monthly total yield is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment for the period. 4. 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. 5. 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. 6. During the period ended September 30, 2024 , the Company determined that transaction costs incurred by the Company attributed to the terminated Merger Agreement were significant. Due to this determination, the Company has separately reported these transaction costs in the Company's Corporate segment and excluded such costs from Selling and administrative expenses. MCGRATH RENTCORP BUSINESS SEGMENT DATA (unaudited) Three months ended September 30, 2023 (dollar amounts in thousands) Mobile Modular Portable Storage TRS-RenTelco Enviroplex Consolidated Revenues Rental $ 74,796 $ 19,232 $ 28,658 $ — $ 122,686 Rental related services 34,429 5,287 776 — 40,492 Rental operations 109,225 24,519 29,434 — 163,178 Sales 57,723 1,144 8,733 9,515 77,115 Other 1,908 363 942 — 3,213 Total revenues 168,856 26,026 39,109 9,515 243,506 Costs and Expenses Direct costs of rental operations: Depreciation 9,123 914 12,032 — 22,069 Rental related services 23,033 4,894 605 — 28,532 Other 21,222 2,131 5,140 — 28,493 Total direct costs of rental operations 53,378 7,939 17,777 — 79,094 Costs of sales 39,039 782 5,651 7,406 52,878 Total costs of revenues 92,417 8,721 23,428 7,406 131,972 Gross Profit Rental 44,451 16,187 11,486 — 72,124 Rental related services 11,395 394 171 — 11,960 Rental operations 55,846 16,581 11,657 — 84,084 Sales 18,684 362 3,082 2,109 24,237 Other 1,908 363 942 — 3,213 Total gross profit 76,438 17,306 15,681 2,109 111,534 Selling and administrative expenses 31,813 8,019 6,999 1,677 48,508 Other income (2,290 ) (450 ) (819 ) — (3,559 ) Income from operations $ 46,915 $ 9,737 $ 9,501 $ 432 66,585 Interest expense (11,025 ) Foreign currency exchange loss (42 ) Provision for income taxes (15,152 ) Net income $ 40,366 Other Information Adjusted EBITDA 1 $ 58,166 $ 12,047 $ 21,039 $ 517 $ 91,769 Average rental equipment 2 $ 1,137,675 $ 212,888 $ 385,353 Average monthly total yield 3 2.19 % 3.01 % 2.46 % Average utilization 4 79.9 % 76.5 % 59.4 % Average monthly rental rate 5 2.74 % 3.94 % 4.17 % 1. Adjusted EBITDA is defined as net income before interest expense, provision for income taxes, depreciation, amortization, non-cash impairment costs, share-based compensation, transaction costs and other income, net. 2. Average rental equipment represents the cost of rental equipment, excluding new equipment inventory and accessory equipment. 3. Average monthly total yield is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment for the period. 4. 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. 5. Average monthly rental rate is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment on rent for the period. MCGRATH RENTCORP BUSINESS SEGMENT DATA (unaudited) Nine months ended September 30, 2024 (dollar amounts in thousands) Mobile Modular Portable Storage TRS-RenTelco Enviroplex Consolidated Revenues Rental $ 236,040 $ 53,270 $ 76,398 $ — $ 365,708 Rental related services 95,450 13,768 2,422 — 111,640 Rental operations 331,490 67,039 78,820 — 477,349 Sales 127,251 3,889 20,261 30,591 181,992 Other 4,795 907 2,153 — 7,855 Total revenues 463,536 71,835 101,234 30,591 667,196 Costs and Expenses Direct costs of rental operations: Depreciation 29,994 2,971 33,547 — 66,512 Rental related services 62,974 13,212 2,029 — 78,215 Other 64,487 4,322 15,373 — 84,182 Total direct costs of rental operations 157,455 20,505 50,949 — 228,909 Costs of sales 83,180 2,390 9,346 22,709 117,625 Total costs of revenues 240,635 22,895 60,295 22,709 346,534 Gross Profit Rental 141,559 45,977 27,478 — 215,014 Rental related services 32,476 556 393 — 33,425 Rental operations 174,035 46,533 27,871 — 248,439 Sales 44,071 1,499 10,915 7,882 64,367 Other 4,795 907 2,153 — 7,855 Total gross profit 222,901 48,939 40,939 7,882 320,661 Selling and administrative expenses 6 100,882 22,064 20,450 5,368 148,764 Other income (6,220 ) (1,319 ) (1,742 ) — (9,281 ) Income from operations $ 128,239 $ 28,194 $ 22,231 $ 2,514 181,178 Interest expense (38,383 ) Foreign currency exchange gain 53 Gain on merger termination from WillScot Mobile Mini 180,000 WillScot Mobile Mini transaction costs (61,157 ) Provision for income taxes (68,913 ) Net income $ 192,778 Other Information Adjusted EBITDA 1 $ 168,165 $ 33,333 $ 55,426 $ 2,799 $ 259,723 Average rental equipment 2 $ 1,206,361 $ 226,373 $ 367,137 Average monthly total yield 3 2.17 % 2.61 % 2.31 % Average utilization 4 78.0 % 66.1 % 56.8 % Average monthly rental rate 5 2.79 % 3.95 % 4.07 % 1. Adjusted EBITDA is defined as net income before interest expense, provision for income taxes, depreciation, amortization, non-cash impairment costs, share-based compensation, transaction costs and other income, net. 2. Average rental equipment represents the cost of rental equipment, excluding new equipment inventory and accessory equipment. 3. Average monthly total yield is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment for the period. 4. 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. 5. 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. 6. During the period ended September 30, 2024 , the Company determined that transaction costs incurred by the Company attributed to the terminated Merger Agreement were significant. Due to this determination, the Company has separately reported these transaction costs in the Company's Corporate segment and excluded such costs from Selling and administrative expenses. MCGRATH RENTCORP BUSINESS SEGMENT DATA (unaudited) Nine months ended September 30, 2023 (dollar amounts in thousands) Mobile Modular Portable Storage TRS-RenTelco Enviroplex Consolidated Revenues Rental $ 209,622 $ 54,776 $ 86,375 $ — $ 350,773 Rental related services 83,799 15,359 2,323 — 101,481 Rental operations 293,421 70,135 88,698 — 452,254 Sales 112,939 2,890 21,368 11,379 148,576 Other 5,249 1,167 3,008 — 9,424 Total revenues 411,609 74,192 113,074 11,379 610,254 Costs and Expenses Direct costs of rental operations: Depreciation 27,196 2,570 36,733 — 66,499 Rental related services 55,702 13,916 2,007 — 71,625 Other 68,726 5,619 15,843 — 90,188 Total direct costs of rental operations 151,624 22,105 54,583 — 228,312 Costs of sales 76,303 1,799 11,307 9,022 98,431 Total costs of revenues 227,927 23,904 65,890 9,022 326,743 Gross Profit Rental 113,700 46,587 33,799 — 194,086 Rental related services 28,097 1,443 316 — 29,856 Rental operations 141,797 48,030 34,115 — 223,942 Sales 36,636 1,091 10,061 2,357 50,145 Other 5,249 1,167 3,008 — 9,424 Total gross profit 183,682 50,288 47,184 2,357 283,511 Selling and administrative expenses 101,360 23,282 23,576 4,814 153,032 Other income (2,290 ) (450 ) (819 ) — (3,559 ) Income (loss) from operations $ 84,612 $ 27,456 $ 24,427 $ (2,457 ) 134,038 Interest expense (28,434 ) Foreign currency exchange gain 166 Provision for income taxes (25,934 ) Net income $ 79,836 Other Information Adjusted EBITDA 1 $ 135,107 $ 34,375 $ 63,212 $ (2,207 ) $ 230,487 Average rental equipment 2 $ 1,073,384 $ 201,946 $ 391,993 Average monthly total yield 3 2.17 % 3.01 % 2.43 % Average utilization 4 79.7 % 78.4 % 59.0 % Average monthly rental rate 5 2.72 % 3.84 % 4.15 % 1. Adjusted EBITDA is defined as net income before interest expense, provision for income taxes, depreciation, amortization, non-cash impairment costs, share-based compensation, transaction costs and other income, net. 2. Average rental equipment represents the cost of rental equipment, excluding new equipment inventory and accessory equipment. 3. Average monthly total yield is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment for the period. 4. 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. 5. 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, non-cash impairment costs, share-based compensation, transaction costs, gains on property sales and non-operating transactions. The gain on merger termination from WillScot Mobile Mini was considered a non-operating transaction and is excluded from Adjusted EBITDA. 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 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 and non-recurring transactions, including share-based compensation, transaction costs, gains on property sales and non-operating transactions, 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, transaction costs, gains on property sales and non-operating transactions. 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 Income from Continuing Operations to Adjusted EBITDA (dollar amounts in thousands) Three Months Ended September 30 , Nine Months Ended September 30 , Twelve Months Ended September 30 , 2024 2023 2024 2023 2024 2023 Income from continuing operations $ 149,317 $ 40,366 $ 192,778 $ 79,836 $ 224,799 $ 114,828 Provision for income taxes from continuing operations 53,502 15,152 68,913 25,934 80,586 35,624 Interest expense 12,642 11,025 38,383 28,434 50,509 32,607 Depreciation and amortization 26,693 26,884 80,824 80,385 108,357 103,893 EBITDA 242,154 93,427 380,898 214,589 464,249 286,952 Share-based compensation 2,393 1,891 6,949 5,155 9,951 7,658 Transaction costs 3 39,436 10 61,157 14,302 62,732 18,188 Other income, net 4 — (3,559 ) (9,281 ) (3,559 ) (9,340 ) (3,559 ) Gain on merger termination from WillScot Mobile Mini 5 (180,000 ) — (180,000 ) — (180,000 ) — Adjusted EBITDA 1 $ 103,983 $ 91,769 $ 259,723 $ 230,487 $ 347,592 $ 309,239 Adjusted EBITDA margin 2 39 % 39 % 38 % 38 % 39 % 39 % Reconciliation of Adjusted EBITDA to Net Cash Provided by Operating Activities (dollar amounts in thousands) Three Months Ended September 30 , Nine Months Ended September 30 , Twelve Months Ended September 30 , 2024 2023 2024 2023 2024 2023 Adjusted EBITDA 1 $ 103,983 $ 91,769 $ 259,723 $ 234,169 $ 347,592 $ 325,138 Interest paid (13,944 ) (11,016 ) (40,338 ) (27,818 ) (51,123 ) (33,611 ) Income taxes paid, net of refunds received (773 ) (2,616 ) 3,826 (9,547 ) (78,192 ) (12,024 ) Gain on sale of used rental equipment (9,648 ) (8,714 ) (25,185 ) (22,964 ) (33,863 ) (34,238 ) Foreign currency exchange loss (216 ) 42 (53 ) (166 ) (197 ) (192 ) Amortization of debt issuance costs 2 2 6 6 8 9 Change in certain assets and liabilities: Accounts receivable, net (7,150 ) (26,223 ) 2,839 (25,939 ) (6,365 ) (26,003 ) Prepaid expenses and other assets 14,171 1,114 19,988 (7,390 ) (1,948 ) (6,561 ) Accounts payable and other liabilities 123,241 4,476 104,293 (29,356 ) 119,382 (30,691 ) Deferred income (10,699 ) (1,382 ) 12,497 7,908 18,683 (1,790 ) Net cash provided by operating activities $ 198,967 $ 47,452 $ 337,596 $ 118,903 $ 313,977 $ 180,037 1. Adjusted EBITDA is defined as net income before interest expense, provision for income taxes, depreciation, amortization, non-cash impairment costs, share-based compensation, other income, net and non-operating transactions. Adjusted EBITDA for the nine months ended September 30, 2023 , excludes the gain on sale of discontinued operations from the divestiture of Adler Tanks . Total Adjusted EBITDA attributed to discontinued operations for the nine month period ended September 30, 2023 was $3,682 . 2. Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by total revenues for the period. 3. Transaction costs include acquisition and divestiture related legal and professional fees and other costs specific to these transactions. 4. Other income, net consists of net gains on property, plant and equipment sales that are infrequent in nature and excluded from Adjusted EBITDA. 5. The gain on merger termination from WillScot Mobile Mini was considered a non-operating transaction and is excluded from Adjusted EBITDA. View source version on businesswire.com : https://www.businesswire.com/news/home/20241023857571/en/ Keith E. Pratt EVP & Chief Financial Officer 925-606-9200 Source: McGrath RentCorp

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