Item 1. Financial Statements
Item 1. Financial Statements
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Shareholders
McGrath RentCorp
Results of review of interim financial statements
We have reviewed the accompanying condensed consolidated balance sheet of McGrath RentCorp (a California Corporation) and subsidiaries (the “Company”) and the related condensed consolidated statements of income, comprehensive income, shareholders’ equity, and cash flows as of June 30, 2025 and for the three-month and six-month periods ended June 30, 2025 and 2024 and the related notes (collectively referred to as the “interim financial statements”). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.
We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheet of the Company as of December 31, 2024, and the related consolidated statements of income, comprehensive income, shareholders’ equity, and cash flows for the year then ended (not presented herein); and in our report dated February 19, 2025, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2024, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.
Basis for review results
These interim financial statements are the responsibility of the Company’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our reviews in accordance with the standards of the PCAOB. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
/s/ GRANT THORNTON LLP
San Francisco, California
July 24, 2025
3
MCGRATH RENTCORP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended June 30,
Six Months Ended June 30,
(in thousands, except per share amounts)
2025
2024
2025
2024
Revenues
Rental
$
125,985
$
121,176
$
246,098
$
241,508
Rental related services
37,483
34,358
71,399
63,938
Rental operations
163,468
155,534
317,497
305,446
Sales
69,775
54,414
108,701
89,483
Other
2,373
2,663
4,834
5,509
Total revenues
235,616
212,611
431,032
400,438
Costs and Expenses
Direct costs of rental operations:
Depreciation of rental equipment
21,426
22,165
42,931
44,531
Rental related services
25,477
24,990
49,790
45,776
Other
31,519
27,920
59,171
56,930
Total direct costs of rental operations
78,422
75,075
151,892
147,237
Costs of sales
46,480
34,121
71,990
56,518
Total costs of revenues
124,902
109,196
223,882
203,755
Gross profit
110,714
103,415
207,150
196,683
Expenses:
Selling and administrative expenses
53,543
49,003
104,412
99,467
Other income, net
—
—
—
( 9,281
)
Income from operations
57,171
54,412
102,738
106,497
Interest expense
7,795
13,037
15,954
25,741
Foreign currency exchange (gain) loss
( 81
)
31
( 86
)
163
WillScot Mobile Mini transaction costs (Note 1)
—
12,367
—
21,721
Income before provision for income taxes
49,457
28,977
86,870
58,872
Provision for income taxes
13,484
8,359
22,689
15,406
Net income
35,973
20,618
64,181
43,466
Earnings per share:
Basic
$
1.46
$
0.84
$
2.61
$
1.77
Diluted
$
1.46
$
0.84
$
2.61
$
1.77
Shares used in per share calculation:
Basic
24,611
24,549
24,592
24,531
Diluted
24,618
24,560
24,620
24,562
Cash dividends declared per share
$
0.485
$
0.475
$
0.970
$
0.950
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
MCGRATH RENTCORP
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
Three Months Ended June 30,
Six Months Ended June 30,
(in thousands)
2025
2024
2025
2024
Net income
$
35,973
$
20,618
$
64,181
$
43,466
Other comprehensive income:
Foreign currency translation adjustment, net of tax impact
—
11
—
78
Comprehensive income
$
35,973
$
20,629
$
64,181
$
43,544
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
McGrath RentCorp
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
June 30,
December 31,
(in thousands)
2025
2024
Assets
Cash
$
1,469
$
807
Accounts receivable, net of allowance for credit losses of $ 2,866 at June 30, 2025 and at December 31, 2024
233,801
219,342
Rental equipment, at cost:
Relocatable modular buildings
1,443,314
1,414,367
Portable storage containers
244,261
240,846
Electronic test equipment
333,171
343,982
2,020,746
1,999,195
Less: accumulated depreciation
( 627,064
)
( 611,536
)
Rental equipment, net
1,393,682
1,387,659
Property, plant and equipment, net
215,720
197,439
Inventories
12,297
14,304
Prepaid expenses and other assets
85,748
80,477
Intangible assets, net
51,919
54,332
Goodwill
332,373
323,224
Total assets
$
2,327,009
$
2,277,584
Liabilities and Shareholders' Equity
Liabilities:
Notes payable
$
572,525
$
590,208
Accounts payable
54,864
60,082
Accrued liabilities
118,177
113,961
Deferred income
125,389
109,836
Deferred income taxes, net
292,893
280,129
Total liabilities
1,163,848
1,154,216
Shareholders’ equity:
Common stock, no par value - Authorized 40,000 shares
Issued and outstanding - 24,612 shares as of June 30, 2025 and 24,551 shares as of December 31, 2024
115,891
116,253
Retained earnings
1,047,270
1,007,115
Total shareholders’ equity
1,163,161
1,123,368
Total liabilities and shareholders’ equity
$
2,327,009
$
2,277,584
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
McGrath RentCorp
CONDENSED Consolidated Statements OF SHAREHOLDERS’ EQUITY
(unaudited)
Common Stock
Retained
Accumulated
Other
Comprehensive
Total
Shareholders’
(in thousands, except per share amounts)
Shares
Amount
Earnings
Income (Loss)
Equity
Balance at December 31, 2024
24,551
$
116,253
$
1,007,115
$
—
$
1,123,368
Net income
—
—
28,209
—
28,209
Share-based compensation
—
2,544
—
—
2,544
Common stock issued under stock plans, net of shares
withheld for employee taxes
55
—
—
—
—
Taxes paid related to net share settlement of stock awards
—
( 5,616
)
—
—
( 5,616
)
Dividends accrued of $ 0.485 per share
—
—
( 12,094
)
—
( 12,094
)
Other comprehensive income
—
—
—
—
—
Balance at March 31, 2025
24,606
$
113,181
$
1,023,230
$
—
$
1,136,411
Net income
—
—
35,973
—
35,973
Share-based compensation
—
2,778
—
—
2,778
Common stock issued under stock plans, net of shares
withheld for employee taxes
6
—
—
—
—
Taxes paid related to net share settlement of stock awards
—
( 68
)
—
—
( 68
)
Dividends accrued of $ 0.485 per share
—
—
( 11,933
)
—
( 11,933
)
Other comprehensive income
—
—
—
—
—
Balance at June 30, 2025
24,612
$
115,891
$
1,047,270
$
—
$
1,163,161
The accompanying notes are an integral part of these condensed consolidated financial statements.
Common Stock
Retained
Accumulated
Other
Comprehensive
Total
Shareholders’
(in thousands, except per share amounts)
Shares
Amount
Earnings
Income (Loss)
Equity
Balance at December 31, 2023
24,496
$
111,122
$
822,796
$
( 116
)
$
933,802
Net income
—
—
22,848
—
22,848
Share-based compensation
—
2,209
—
—
2,209
Common stock issued under stock plans, net of shares
withheld for employee taxes
45
—
—
—
—
Taxes paid related to net share settlement of stock awards
—
( 4,082
)
—
—
( 4,082
)
Dividends accrued of $ 0.475 per share
—
—
( 11,824
)
—
( 11,824
)
Other comprehensive income
—
—
—
67
67
Balance at March 31, 2024
24,541
$
109,249
$
833,820
$
( 49
)
$
943,020
Net income
—
—
20,618
—
20,618
Share-based compensation
—
2,347
—
—
2,347
Common stock issued under stock plans, net of shares
withheld for employee taxes
9
—
—
—
—
Dividends accrued of $ 0.475 per share
—
—
( 11,763
)
—
( 11,763
)
Other comprehensive income
—
—
—
11
11
Balance at June 30, 2024
24,550
$
111,596
$
842,675
$
( 38
)
$
954,233
The accompanying notes are an integral part of these condensed consolidated financial statements.
7
McGrath RentCorp
CONDENSED Consolidated Statements of Cash Flows
(unaudited)
Six Months Ended June 30,
(in thousands)
2025
2024
Cash Flows from Operating Activities:
Net income
$
64,181
$
43,466
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization
52,739
54,131
Deferred income taxes
12,764
11,592
Provision for credit losses
826
873
Share-based compensation
5,322
4,556
Gain on sale of property, plant and equipment
—
( 9,281
)
Gain on sale of used rental equipment
( 16,674
)
( 15,537
)
Foreign currency exchange (gain) loss
( 86
)
163
Amortization of debt issuance costs
45
4
Change in:
Accounts receivable
( 15,285
)
9,116
Inventories
2,007
( 12,788
)
Prepaid expenses and other assets
( 5,270
)
5,817
Accounts payable
( 8,402
)
23,155
Accrued liabilities
2,403
166
Deferred income
15,124
23,196
Net cash provided by operating activities
109,694
138,629
Cash Flows from Investing Activities:
Purchases of rental equipment
( 50,230
)
( 145,345
)
Purchases of property, plant and equipment
( 21,621
)
( 30,125
)
Cash paid for acquisition of businesses
( 21,947
)
—
Proceeds from sales of used rental equipment
32,200
29,334
Proceeds from sales of property, plant and equipment
—
12,251
Net cash used in investing activities
( 61,598
)
( 133,885
)
Cash Flows from Financing Activities:
Net payments under bank lines of credit
( 17,730
)
( 43,708
)
Borrowings under term note agreement
—
75,000
Taxes paid related to net share settlement of stock awards
( 5,684
)
( 4,082
)
Payment of dividends
( 24,020
)
( 23,435
)
Net cash (used in) provided by financing activities
( 47,434
)
3,775
Net increase in cash
662
8,519
Cash balance, beginning of period
807
877
Cash balance, end of period
$
1,469
$
9,396
Supplemental Disclosure of Cash Flow Information:
Interest paid, during the period
$
15,982
$
26,394
Net income taxes paid (refunded), during the period
$
5,786
$
( 4,599
)
Dividends accrued during the period, not yet paid
$
12,443
$
12,150
Rental equipment acquisitions, not yet paid
$
8,658
$
7,634
Business acquisition payments withheld
$
1,815
$
—
The accompanying notes are an integral part of these condensed consolidated financial statements.
8
MCGRATH RENTCORP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2025
NOTE 1. CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The condensed consolidated financial statements for the six months ended June 30, 2025 and 2024 have not been audited, but in the opinion of management, all adjustments (consisting of normal recurring accruals, consolidating and eliminating entries) necessary for the fair presentation of the consolidated financial position, results of operations and cash flows of McGrath RentCorp (the “Company”) have been made. The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and note disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to those rules and regulations. The consolidated results for the three and six months ended June 30, 2025, should not be considered as necessarily indicative of the consolidated results for the entire fiscal year. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s latest Annual Report on Form 10-K, filed with the SEC on February 19, 2025 for the year ended December 31, 2024 (the “2024 Annual Report”).
Mutual decision to terminate Merger Agreement with WillScot Mobile Mini Holdings Corp.
As previously disclosed, on January 28, 2024, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”), with WillScot Mobile Mini Holdings Corp., a Delaware corporation ("WillScot Mobile Mini”), Brunello Merger Sub I, Inc., a California corporation and a direct wholly owned subsidiary of WillScot Mobile Mini, and Brunello Merger Sub II, LLC, a Delaware limited liability company and direct wholly owned subsidiary of WillScot Mobile Mini. On September 17, 2024, the Company and WillScot Mobile Mini mutually agreed to terminate the Merger Agreement, effective upon WillScot Mobile Mini's cash payment of $ 180.0 million to the Company, which was received on September 20, 2024.
Transaction costs attributed to the Merger Agreement are reported in the Company's Corporate segment. Expenses recognized as a result of the terminated merger totaled $ 21.7 million and $ 63.2 million for the six and twelve month periods ended June 30, 2024 and December 31, 2024, respectively. The termination payment received of $ 180.0 million, net of transaction costs, resulted in net proceeds received of $ 116.8 million during the year ended December 31, 2024. The Company determined that the transaction costs incurred on the terminated merger were significant and required separate presentation on the Company's consolidated statements of income for the year ended December 31, 2024. Due to this determination, the Company has excluded such transaction costs from Selling and administrative expenses and reported them separately on the consolidated statements of income as non-operating expenses.
NOTE 2. NEW ACCOUNTING PRONOUNCEMENTS
In December 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes—Improvements to Income Tax Disclosures (Topic 740), which will require Companies to disclose annually the specific categories in income tax rate reconciliations, provide additional information for reconciling items which meet a quantitative threshold, and disaggregate domestic and foreign income or loss from continuing operations. Additionally, this ASU will also require the disclosure of income tax expense or benefit from continuing operations disaggregated by federal, state and foreign. This ASU is effective for fiscal years beginning after December 15, 2024, and applied on a prospective basis. The Company is in the process of evaluating the financial statement impact of this ASU.
In November 2024, the FASB issued Accounting Standards Update ("ASU") 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses . This ASU requires incremental disclosures about specific expense categories, including but not limited to, employee compensation, depreciation, intangible asset amortization, selling expenses and purchases of inventory. This ASU is effective for fiscal years beginning after December 31, 2026, and interim reporting periods within annual reporting periods beginning after December 31, 2027. Early adoption is permitted and may be applied either prospectively or retrospectively. The Company is in the process of evaluating the financial statement impact of this ASU.
NOTE 3. BUSINESS COMBINATIONS
During the quarter ended June 30, 2025, the Company completed the acquisition of a regional provider of temporary and permanent modular space solutions for $ 11.8 million and a regional provider of container solutions for $ 12.0 million, subject to holdback payments of $ 1.2 million and $ 0.6 million, respectively. The preliminary purchase price allocation of the modular solutions provider was $ 6.3 million to the fair value of rental equipment acquired, intangible assets of $ 1.1 million and $ 4.3 million to goodwill. The preliminary purchase price allocation to the container solutions provider was $ 4.7 million to the fair value of rental equipment acquired, $ 1.0 million to property, plant and equipment, intangible assets of $ 1.7 million and $ 4.9 million to goodwill. These acquisitions were
9
accounted for as a purchase of a “business” in accordance with criteria in Accounting Standards Codification ("ASC") 805, Business Combinations , using the purchase method of accounting. Incremental transaction costs totaled $ 0.2 million for the quarter ended June 30, 2025.
NOTE 4. REVENUE RECOGNITION
The Company’s accounting for revenues is governed by two accounting standards. The majority of the Company’s revenues are considered lease or lease related and are accounted for in accordance with Accounting Standards Codification 842, Leases (Topic 842). Revenues determined to be non-lease related are accounted for in accordance with ASC 606, Revenue from Contracts with Customers (Topic 606). The Company accounts for revenues when approval and commitment from both parties have been obtained, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. The Company typically recognizes non-lease related revenues at a point in time because the customer does not simultaneously consume the benefits of the Company’s promised goods and services, or performance obligations, and obtains control when delivery and installation are complete. For contracts that have multiple performance obligations, the transaction price is allocated to each performance obligation in the contract based on the Company’s best estimate of the standalone selling prices of each distinct performance obligation in the contract. The standalone selling price is typically determined based upon the expected cost plus an estimated margin of each performance obligation.
Revenue from contracts that satisfy the criteria for over-time recognition are recognized as work is performed by using the ratio of costs incurred to estimated total contract costs for each contract. The majority of revenue for these contracts is derived from long-term projects which typically span multiple quarters . The timing of revenue recognition, billings, and cash collections results in billed contract receivables and contract assets on the Company's Consolidated Balance Sheets. In the Company’s contracts, amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals or upon achievement of contractual milestones. Billings can occur subsequent to revenue recognition, resulting in contract assets, or in advance, resulting in contract liabilities. These contract assets and liabilities are reported on the condensed consolidated balance sheets on a contract-by-contract basis at the end of each reporting period. The contract liabilities included in Deferred income on the Company’s condensed consolidated balance sheets totaled $ 54.2 million and $ 35.4 million at June 30, 2025 and December 31, 2024, respectively. Sales revenues totaling $ 13.8 million and $ 28.7 million were recognized during the three and six months ended June 30, 2025, respectively, which were included in the contract liability balance at December 31, 2024. For certain modular building sales, the customer retains a small portion of the contract price until full completion of the contract, or revenue is recognizable prior to customer billing, which results in revenue earned in excess of billings. These unbilled contract assets are included in Accounts receivable on the Company’s condensed consolidated balance sheets and totaled $ 20.0 million and $ 13.0 million at June 30, 2025 and December 31, 2024, respectively. The Company did not recognize any material contract asset impairments during the periods ended June 30, 2025 and December 31, 2024, respectively.
The Company's uncompleted contracts with customers which meet the criteria for over-time revenue recognition have unsatisfied or partially satisfied performance obligations. As of June 30, 2025, approximately $ 43.8 million of revenue is expected to be recognized for unsatisfied or partially satisfied obligations. The Company expects to recognize revenue for approximately one half of these unsatisfied or partially satisfied performance obligations over the next twelve months, with the remaining balance recognized thereafter. For the three and six months ended June 30, 2025, approximately $ 67.5 million and $ 104.8 million of revenue was recognized for sales and non-lease services transferred at a point in time, respectively, and approximately $ 13.9 million and $ 24.1 million of revenue was recognized for sales and non-lease services transferred over time, respectively.
The Company generally rents and sells to customers on 30 day payment terms. The Company does not typically offer variable payment terms or accept non-monetary consideration. Amounts billed and due from the Company’s customers are classified as Accounts receivable on the Company’s consolidated balance sheet. For certain sales of modular buildings, progress payments from the customer are received during the manufacturing of new equipment, or the preparation of used equipment. The advance payments are not considered a significant financing component because the payments are used to meet working capital needs during the contract and to protect the Company from the customer failing to adequately complete their obligations under the contract.
Lease Revenues
Rental revenues from operating leases are recognized on a straight-line basis over the term of the lease for all operating segments. Rental billings for periods extending beyond period end are recorded as deferred income and are recognized in the period earned. Rental related services revenues are primarily associated with relocatable modular buildings. For modular building leases, rental related services revenues for modifications, delivery, installation, dismantle and return delivery are lease related because the payments are considered minimum lease payments that are an integral part of the negotiated lease agreement with the customer. These revenues are recognized on a straight-line basis over the term of the lease. Certain leases are accounted for as finance leases. For these leases, sales revenue and the related accounts receivable are recognized upon delivery and installation of the equipment and the unearned interest is recognized over the lease term on a basis which results in a constant rate of return on the unrecovered lease investment. As of the six
10
months ended June 30, 2025, the Company’s future minimum lease payments to be received under non-cancelable finance leases were $ 6.7 million. Of the total investment in sales-type leases, future minimum lease payments are expected to be $ 1.9 million for the remainder of the current year, $ 1.8 million in 2026, $ 1.0 million in 2027, $ 1.1 million in 2028 and $ 0.8 million in 2029. The Company’s assessment of current expected losses on these receivables was not material and therefore no credit loss expense was provided as of the six months ended June 30, 2025. Other revenues include interest income on finance leases and rental income on facility leases.
In the three and six months ended June 30, 2025, the Company’s lease revenues were $ 154.2 million and $ 302.1 million, respectively, consisting of $ 152.7 million and $ 299.9 million of operating lease revenues, respectively, and $ 1.5 million and $ 2.2 million of finance lease revenues, respectively. The Company has entered into finance leases to finance certain equipment sales to customers. The lease agreements have a bargain purchase option at the end of the lease term. For these leases, sales revenue and the related accounts receivable are recognized upon delivery and installation of the equipment and the unearned interest is recognized over the lease term on a straight-line basis, which results in a constant rate of return on the unrecovered lease investment. The Company’s finance lease revenues for the three and six months ended June 30, 2025, include $ 1.3 million and $ 1.8 million of sales revenues, respectively, and $ 0.2 million and $ 0.4 million of interest income, respectively.
Non-Lease Revenues
Non-lease revenues are recognized in the period when control of the performance obligation is transferred, in an amount that reflects the consideration the Company expects to be entitled to receive in exchange for those goods or services. For portable storage containers and electronic test equipment, rental related services revenues for delivery and return delivery are considered non-lease revenues.
Sales revenues are typically recognized at a point in time, which occurs upon the completion of delivery, installation and acceptance of the equipment by the customer. Sales contracts that satisfy the criteria for over-time recognition are recognized as work is performed by using the ratio of costs incurred to estimated total contract costs for each contract. Accounting for non-lease revenues requires judgment in determining the point in time the customer gains control of the equipment and the appropriate accounting period to recognize revenue.
Sales taxes charged to customers are reported on a net basis and are excluded from revenues and expenses.
11
The following table disaggregates the Company’s revenues by lease (within the scope of Topic 842) and non-lease revenues (within the scope of Topic 606) and the underlying service provided for the three and six months ended June 30, 2025 and 2024:
(in thousands)
Mobile
Modular
Portable Storage
TRS-
RenTelco
Enviroplex
Consolidated
Three Months Ended June 30,
2025
Leasing
$
107,971
$
17,383
$
28,837
$
—
$
154,191
Non-lease:
Rental related services
7,498
4,123
794
—
12,415
Sales
40,484
1,712
6,444
19,866
68,506
Other
35
128
341
—
504
Total non-lease
48,017
5,963
7,579
19,866
81,425
Total revenues
$
155,988
$
23,346
$
36,416
$
19,866
$
235,616
2024
Leasing
$
101,864
$
18,366
$
26,411
$
—
$
146,641
Non-lease:
Rental related services
6,727
4,347
709
—
11,783
Sales
35,930
1,266
5,218
11,373
53,787
Other
25
43
332
—
400
Total non-lease
42,682
5,656
6,259
11,373
65,970
Total revenues
$
144,546
$
24,022
$
32,670
$
11,373
$
212,611
Six Months Ended June 30,
2025
Leasing
$
212,735
$
33,975
$
55,401
$
—
$
302,111
Non-lease:
Rental related services
12,127
7,512
1,474
—
21,113
Sales
62,974
2,956
13,866
27,079
106,875
Other
70
169
694
—
933
Total non-lease
75,171
10,637
16,034
27,079
128,921
Total revenues
$
287,906
$
44,612
$
71,435
$
27,079
$
431,032
2024
Leasing
$
196,754
$
37,395
$
52,656
$
—
$
286,805
Non-lease:
Rental related services
10,999
8,738
1,332
—
21,069
Sales
61,256
2,478
11,757
13,092
88,583
Other
3,122
171
688
—
3,981
Total non-lease
75,377
11,387
13,777
13,092
113,633
Total revenues
$
272,131
$
48,782
$
66,433
$
13,092
$
400,438
Customer returns of rental equipment prior to the end of the rental contract term are typically billed a cancellation fee, which is recorded as rental revenue in the period billed. Sales of new relocatable modular buildings, portable storage containers and electronic test equipment not manufactured by the Company are typically covered by warranties provided by the manufacturer of the products sold. The Company typically provides limited 90 -day warranties for certain sales of used rental equipment and one-year warranties on equipment manufactured by Enviroplex. Although the Company’s policy is to provide reserves for warranties when required for specific circumstances, warranty costs have not been significant to date.
The Company’s incremental cost of obtaining lease contracts, which consists of salesperson commissions, are deferred and amortized over the initial lease term for modular and portable storage leases. Incremental costs for obtaining a contract for TRS-RenTelco are expensed in the period incurred because the lease term is typically less than 12 months.
12
Other Income, net
Other income, net consists of the net gain on sales of property, plant and equipment. These sales are generally recognized at a point in time, with contractually defined performance obligations that are typically transferred upon the closing date of the sale. These types of sales are infrequent in occurrence and reported on the condensed consolidated statements of income within the scope of ASC 610, Other Income . Proceeds to be received from the sale of property, plant and equipment are included in Accounts receivable on the Company's condensed consolidated balance sheets.
13
NOTE 5. EARNINGS PER SHARE
Basic earnings per share (“EPS”) is computed as net income divided by the weighted-average number of shares of common stock outstanding for the period. Diluted EPS is computed assuming conversion of all potentially dilutive securities including the dilutive effect of stock options, unvested restricted stock awards and other potentially dilutive securities. The table below presents the weighted-average number of shares of common stock used to calculate basic and diluted earnings per share:
Three Months Ended
June 30,
Six Months Ended
June 30,
(in thousands)
2025
2024
2025
2024
Weighted-average number of shares of common stock for
calculating basic earnings per share
24,611
24,549
24,592
24,531
Effect of potentially dilutive securities from equity-based
compensation
7
11
28
31
Weighted-average number of shares of common stock for
calculating diluted earnings per share
24,618
24,560
24,620
24,562
There were 85,512 and 73,190 anti-dilutive securities excluded from the computation of diluted earnings per share for the six months ended June 30, 2025 and 2024, respectively.
The Company has in the past made purchases of shares of its common stock from time to time in over-the-counter market (NASDAQ) transactions, through privately negotiated, large block transactions and through a share repurchase plan, in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). In September 2024, the Company's Board of Directors increased the capacity under the share repurchase program by authorizing the Company to repurchase up to 2,000,000 shares of the Company's outstanding common stock (the "Repurchase Plan"), an increase from the 1,309,805 remaining shares authorized for repurchase under the Repurchase Plan established in August 2015. The amount and time of the specific repurchases are subject to prevailing market conditions, applicable legal requirements and other factors, including management’s discretion. All shares repurchased by the Company are canceled and returned to the status of authorized but unissued shares of common stock. There can be no assurance that any authorized shares will be repurchased, and the Repurchase Plan may be modified, extended or terminated by the Company’s Board of Directors at any time. There were no shares repurchased during the six months ended June 30, 2025 and 2024. As of June 30, 2025, 2,000,000 shares remained authorized for repurchase under the Repurchase Plan.
NOTE 6. INVENTORIES
Inventories consist of raw materials, supplies and work-in-process. Inventories are measured at the lower of actual cost or net realizable value for acquired units and estimated standard costs for manufactured units. The costs include expenditures incurred in acquiring the inventories, manufacturing, production costs, and other costs incurred in bringing them to their existing location and condition. The following table presents the carrying value of inventories:
(dollar amounts in thousands)
June 30,
December 31,
2025
2024
Raw materials
$
4,531
$
3,380
Work-in-process
7,766
10,924
Inventories
$
12,297
$
14,304
14
NOTE 7. GOODWILL AND INTANGIBLE ASSETS
Intangible assets consist of the following:
(dollar amounts in thousands)
Estimated
useful life
in years
Average remaining life in years
Cost
Accumulated amortization
Net book value
June 30, 2025
Customer relationships
6 to 11
6.5
$ 75,734
$( 29,069 )
$ 46,665
Non-compete agreements
5
2.5
10,806
( 6,286 )
4,520
Trade name
0.75 to 8
3.8
2,000
( 1,437 )
563
Total amortizing
88,540
( 36,792 )
51,748
Trade name - non-amortizing
Indefinite
171
—
171
Total
$ 88,711
$( 36,792 )
$ 51,919
December 31, 2024
Customer relationships
8 to 11
6.9
$ 73,217
$( 25,010 )
$ 48,207
Non-compete agreements
5
2.8
10,556
( 5,239 )
5,317
Trade name
0.75 to 8
4.3
2,000
( 1,363 )
637
Total amortizing
85,773
( 31,612 )
54,161
Trade name - non-amortizing
Indefinite
171
—
171
Total
$ 85,944
$( 31,612 )
$ 54,332
The Company assesses potential impairment of its goodwill and intangible assets when there is evidence that events or circumstances have occurred that would indicate the recovery of an asset’s carrying value is unlikely. The Company also assesses potential impairment of its goodwill and intangible assets with indefinite lives on an annual basis regardless of whether there is evidence of impairment. If indicators of impairment were to be present in intangible assets used in operations and future discounted cash flows were not expected to be sufficient to recover the asset’s carrying amount, an impairment loss would be charged to expense in the period identified. The amount of an impairment loss that would be recognized is the excess of the asset’s carrying value over its fair value. Factors the Company considers important, which may cause impairment include, among others, significant changes in the manner of use of the acquired asset, negative industry or economic trends, and significant underperformance relative to historical or projected operating results. The Company last conducted a qualitative analysis of its goodwill and intangible assets in the fourth quarter 2024, with no indicators of impairment. In addition, no impairment triggering events occurred during the six months ended June 30, 2025, and there were no changes to the carrying value of goodwill during this period. Determining fair value of a reporting unit is judgmental and involves the use of significant estimates and assumptions. The Company bases its fair value estimates on assumptions that it believes are reasonable but are uncertain and subject to changes in market conditions.
Intangible assets with finite useful lives are amortized over their respective useful lives. Amortization expense in the six months ended June 30, 2025 and 2024, was $ 5.2 million and $ 5.1 million, respectively. Based on the carrying values at June 30, 2025 and assuming no subsequent impairment of the underlying assets, the amortization expense is expected to be $ 5.3 million for the remainder of fiscal year 2025, $ 10.2 million in 2026, $ 10.0 million in 2027, $ 8.6 million in 2028, $ 5.1 million in 2029 and $ 3.3 million in 2030.
15
NOTE 8. SEGMENT REPORTING
FASB guidelines establish annual and interim reporting standards for an enterprise’s operating segments and related disclosures about its products, services, geographic areas and major customers. In accordance with these guidelines, the Company’s four reportable segments are Mobile Modular, Portable Storage, TRS-RenTelco and Enviroplex. The Company's Chief Operating Decision Maker ("CODM") Joe Hanna, Chief Executive Officer, and senior management focus on several key measures to evaluate and assess each segment’s performance, including rental, rental related services and sales revenue growth, gross profit, income from operations and income before provision for income taxes. In addition to the evaluation of the aforementioned key measures of each reportable segment, the CODM and senior management evaluate supplemental information by reportable segment, such as rental equipment acquisitions, fleet utilization, and average utilization, to further assess segment performance and the future allocation of Company resources.
The CODM is the primary individual in control of resource allocation, and the allocation determinations are made in consultation with the Company’s senior management team, of which the CODM is a member. The most significant allocation determinations made by the CODM pertain to purchases of rental equipment and employee headcount. These determinations are generally made as part of the annual budgeting process, with regular reviews occurring throughout the year that can result in allocation changes depending upon performance against budget. On a monthly basis, the CODM considers period end and average rental equipment utilization and budget-to-actual variances to gross profit, income from operations and income before provision for income taxes when making decisions about allocating capital and employee resources to the segments. Excluding interest expense, allocations of revenue and expense not directly associated with one of these segments are generally allocated to Mobile Modular, Portable Storage and TRS-RenTelco, based on their pro-rata share of direct revenues. Interest expense is allocated amongst Mobile Modular, Portable Storage and TRS-RenTelco based on their pro-rata share of average rental equipment at cost, goodwill, intangible assets, accounts receivable, deferred income and customer security deposits. The Company does not report total assets by business segment.
Summarized financial information for the six months ended June 30, 2025 and 2024, for the Company’s reportable segments is shown in the following tables:
16
(dollar amounts in thousands)
Mobile
Modular
Portable Storage
TRS-
RenTelco
Enviroplex 1
Consolidated
Six Months Ended June 30,
2025
Revenues
Rental revenues
$
160,404
$
33,014
$
52,680
$
—
$
246,098
Rental related services revenues
61,647
8,025
1,727
—
71,399
Sales
62,974
2,956
15,692
27,079
108,701
Other
2,881
617
1,336
—
4,834
Total revenues
287,906
44,612
71,435
27,079
431,032
Costs of Revenues
Depreciation of rental equipment
21,294
2,070
19,567
—
42,931
Rental related services
40,190
8,237
1,363
—
49,790
Other
44,802
3,445
10,924
—
59,171
Costs of sales
42,926
1,879
8,343
18,842
71,990
Total costs of revenues
149,212
15,631
40,197
18,842
223,882
Gross profit
138,694
28,981
31,238
8,237
207,150
Significant Segment Expenses 3
Wages and benefits
29,734
6,933
5,810
2,411
44,888
Depreciation and amortization
7,101
749
35
204
8,089
Marketing and administrative expenses
9,598
3,352
2,678
1,173
16,801
Allocated corporate services 4
23,949
3,742
6,139
—
33,830
Other segment items 5
383
325
96
—
804
Total expenses
70,765
15,101
14,758
3,788
104,412
Income from operations
67,929
13,880
16,480
4,449
102,738
Interest expense (income) allocation
12,914
1,852
2,410
( 1,222
)
15,954
Foreign currency exchange gain
—
—
( 86
)
—
( 86
)
Income before provision for income taxes
$
55,015
$
12,028
$
14,156
$
5,671
$
86,870
Reconciliation of Segment Profit (Loss)
Total segment gross profit
$
207,150
Segment operating expenses, net
104,412
Interest expense allocation
15,954
Foreign currency exchange gain
( 86
)
Income before provision for income taxes
$
86,870
Other Selected Information
Rental equipment acquisitions
$
34,479
$
618
$
18,399
—
$
53,496
Accounts receivable, net (period end)
$
177,549
$
12,857
$
23,085
$
20,310
$
233,801
Rental equipment, at cost (period end)
$
1,443,314
$
244,261
$
333,171
—
$
2,020,746
Rental equipment, net book value (period end)
$
1,071,846
$
220,048
$
101,788
—
$
1,393,682
Utilization (period end) 2
73.1
%
61.8
%
64.8
%
Average utilization 2
74.2
%
60.6
%
63.0
%
17
(dollar amounts in thousands)
Mobile
Modular
Portable Storage
TRS-
RenTelco
Enviroplex 1
Consolidated
Six Months Ended June 30,
2024
Revenues
Rental revenues
$
154,535
$
36,230
$
50,743
$
—
$
241,508
Rental related services revenues
53,053
9,363
1,522
—
63,938
Sales
61,256
2,478
12,657
13,092
89,483
Other
3,287
711
1,511
—
5,509
Total revenues
272,131
48,782
66,433
13,092
400,438
Costs of Revenues
Depreciation of rental equipment
19,870
1,965
22,696
—
44,531
Rental related services
35,608
8,932
1,236
—
45,776
Other
43,938
2,995
9,997
—
56,930
Costs of sales
39,584
1,484
5,658
9,792
56,518
Total costs of revenues
139,000
15,377
39,587
9,792
203,755
Gross profit
133,131
33,405
26,846
3,300
196,683
Significant Segment Expenses 3
Wages and benefits
28,201
7,035
5,210
2,283
42,729
Depreciation and amortization
6,758
801
53
193
7,805
Marketing and administrative expenses
8,829
3,058
2,732
1,038
15,657
Allocated corporate services 4
22,620
4,082
5,796
—
32,498
Other segment items 5
446
299
32
—
777
Total expenses
66,854
15,275
13,823
3,515
99,467
Other income, net
( 6,220
)
( 1,319
)
( 1,742
)
—
( 9,281
)
Income from operations
72,499
19,450
14,765
( 215
)
106,497
Interest expense (income) allocation
19,971
2,867
4,121
( 1,218
)
25,741
Foreign currency exchange loss
—
—
163
—
163
Income before provision for income taxes
$
52,528
$
16,583
$
10,481
$
1,003
$
80,593
Reconciliation of Segment Profit (Loss)
Total segment gross profit
$
196,683
Segment operating expenses, net
99,467
Other income, net
( 9,281
)
Interest expense allocation
25,741
Foreign currency exchange loss
163
WillScot Mobile Mini transaction costs 6
21,721
Income before provision for income taxes
$
58,872
Other Selected Information
Rental equipment acquisitions
$
118,300
$
7,403
$
10,623
—
$
136,326
Accounts receivable, net (period end)
$
170,966
$
12,231
$
20,333
$
13,849
$
217,379
Rental equipment, at cost (period end)
$
1,398,475
$
242,107
$
368,324
—
$
2,008,906
Rental equipment, net book value (period end)
$
1,058,041
$
221,486
$
127,795
—
$
1,407,322
Utilization (period end) 2
78.1
%
64.5
%
55.8
%
Average utilization 2
78.6
%
67.8
%
56.4
%
1. Gross Enviroplex sales revenues were $ 27,079 and $ 13,093 for the six months ended June 30, 2025 and 2024, respectively. There were no inter-segment sales to Mobile Modular in the six months ended June 30, 2025 and $ 2 of inter-segment sales to Mobile Modular in the six months ended June 30, 2024, which required elimination in consolidation.
2. Utilization is calculated each month by dividing the cost of rental equipment on rent by the total cost of rental equipment excluding new equipment inventory and accessory equipment. The average utilization for the period is calculated using the average costs of rental equipment.
3. The Significant Segment Expense categories and amounts align with the segment-level information that is regularly provided to the CODM.
4. Allocated corporate services costs are comprised of expenses incurred by the Company which are not directly incurred by each business segment as a part of their normal operations. These allocated indirect corporate costs primarily include wages and benefits, depreciation of corporate capital assets, information technology, legal, accounting and other administrative expenses.
5. Other segment items for each reportable segment is primarily comprised of credit losses.
6. During the six months ended June 30, 2024, the Company incurred $ 21,721 of transaction costs attributed to the terminated merger with WillScot Mobile Mini.
No single customer accounted for more than 10% of total revenues for the six months ended June 30, 2025 and 2024. Revenues from foreign country customers accounted for 2 % of the Company’s total revenues for the same periods, respectively.
18
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.