Item 2. Management’s Discussion and Analysis
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This Form 10-Q, including the following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), contains forward-looking statements under federal securities laws. Forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties. Our actual results could differ materially from those indicated by forward-looking statements as a result of various factors. These factors include, but are not limited to, those set forth under this Item, those discussed in Part II—Item 1a, “Risk Factors” and elsewhere in this Form 10-Q and those that may be identified from time to time in our reports and registration statements filed with the SEC.
This discussion should be read in conjunction with the Condensed Consolidated Financial Statements and related Notes included in Part I—Item 1 of this Form 10-Q and the Consolidated Financial Statements and related Notes and the Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on February 19, 2025 (the “2024 Annual Report”). In preparing the following MD&A, we presume that readers have access to and have read the MD&A in our 2024 Annual Report, pursuant to Instruction 2 to paragraph (b) of Item 303 of Regulation S-K. We undertake no duty to update any of these forward-looking statements after the date of filing of this Form 10-Q to conform such forward-looking statements to actual results or revised expectations, except as otherwise required by law.
General
The Company, incorporated in 1979, is a leading rental provider of relocatable modular buildings for classroom and office space and electronic test equipment for general purpose and communications needs. The Company’s primary emphasis is on equipment rentals. The Company is comprised of four reportable business segments: (1) its modular building segment (“Mobile Modular”); (2) its portable storage container segment (“Portable Storage”); (3) its electronic test equipment segment (“TRS-RenTelco”); and (4) its classroom manufacturing business selling modular buildings used primarily as classrooms in California (“Enviroplex”).
In the nine months ended September 30, 2025, Mobile Modular, Portable Storage, TRS-RenTelco and Enviroplex contributed 66%, 12%, 16% and 6% of the Company’s income before provision for taxes (the equivalent of “pretax income”), respectively, compared to 69%, 17%, 11% and 3% for the same period in 2024.
The Company generates its revenues primarily from the rental of its equipment on operating leases and from sales of equipment occurring in the normal course of business. The Company requires significant capital outlay to purchase its rental inventory and recovers its investment through rental and sales revenues. Rental revenues and certain other service revenues negotiated as part of lease agreements with customers and related costs are recognized on a straight-line basis over the terms of the leases. Sales revenues and related costs are recognized upon delivery and installation of the equipment to customers. Sales revenues are less predictable and can fluctuate from quarter to quarter and year to year depending on customer demands and requirements. Generally, rental revenues less cash operating costs recover the equipment’s capitalized cost in a short period of time relative to the equipment’s potential rental life and when sold, sale proceeds are usually above its net book value.
The Company’s modular revenues (consisting of revenues from Mobile Modular, Kitchens To Go and Enviroplex) are derived from rentals and sales to commercial and education customers. Modular revenues are affected by demand for classrooms, which in turn is affected by shifting and fluctuating school populations, the levels of state funding to public schools, the need for temporary classroom space during reconstruction of older schools and changes in policies regarding class size. As a result of any reduced funding, lower expenditures by these schools may result in certain planned programs to increase the number of classrooms, such as those that the Company provides, to be postponed or terminated. However, reduced expenditures may also result in schools reducing their long-term facility construction projects in favor of using the Company’s modular classroom solutions. At this time, the Company can provide no assurances as to whether public schools will either reduce or increase their demand for the Company's modular classrooms as a result of fluctuations in state funding of public schools. Looking forward, the Company believes that any interruption in the passage of facility bonds or contraction of class size reduction programs by public schools may have a material adverse effect on both rental and sales revenues of the Company. (For more information, see “ Item 1. Business – Relocatable Modular Buildings – Classroom Rentals and Sales to Public Schools (K-12) ” in the Company’s 2024 Annual Report and “ Item 1a. Risk Factors – Significant reductions of, or delays in, funding to public schools have caused the demand and pricing for our modular classroom units to decline, which has in the past caused, and may cause in the future, a reduction in our revenues and profitability ” in the Company's 2024 Annual Report.
Revenues of Portable Storage consists of the rental and sale of steel containers and ground level offices to provide a temporary storage solution that is delivered to the customer’s location and addresses the need for secure temporary storage with immediate access to the unit. The portable storage container rental market in the U.S. has a large and diverse number of market segments including construction, retail, commercial and industrial, energy and petrochemical, manufacturing, education and healthcare.
21
Revenues of TRS-RenTelco are derived from the rental and sale of general purpose and communications test equipment to a broad range of companies, from Fortune 500 to middle and smaller market companies primarily in the aerospace, defense, communications, manufacturing and semiconductor industries. Electronic test equipment revenues are primarily affected by the business activity within these industries related to research and development, manufacturing, and communication infrastructure installation and maintenance.
The Company’s rental operations include rental and rental related service revenues which comprised approximately 72% and 71% of consolidated revenues in the nine months ended September 30, 2025 and 2024, respectively. Of the total rental operations revenues for the nine months ended September 30, 2025, Mobile Modular, Portable Storage and TRS-RenTelco comprised 71%, 12% and 17%, respectively, compared to 69%, 14% and 17%, respectively, in the same period of 2024. The Company’s direct costs of rental operations include depreciation of rental equipment, rental related service costs, impairment of rental equipment (if applicable), and other direct costs of rental operations (which include direct labor, supplies, repairs, insurance, property taxes, license fees, cost of sub-rentals and amortization of certain lease costs).
The Company’s Mobile Modular, Portable Storage and TRS-RenTelco business segments sell modular units, storage containers and electronic test equipment, respectively, which are either new or previously rented. In addition, Enviroplex sells new modular buildings used primarily as classrooms in California. For the nine months ended September 30, 2025 and 2024, sales and other revenues of modular, container and electronic test equipment comprised approximately 28% and 29% of the Company’s consolidated revenues, respectively. Of the total sales and other revenues from operations for the nine months ended September 30, 2025 and 2024, Mobile Modular and Enviroplex together comprised 84% and 85%, respectively, Portable Storage comprised 3% in both periods, and TRS-RenTelco comprised 13% and 12%, respectively. The Company’s cost of sales includes the carrying value of the equipment sold and the direct costs associated with the equipment sold, such as delivery, installation, modifications and related site work.
Selling and administrative expenses primarily include personnel and benefit costs, which include share-based compensation, depreciation and amortization, bad debt expense, advertising costs, and professional service fees. The Company believes that sharing of common facilities, financing, senior management, and operating and accounting systems by all of the Company’s operations results in an efficient use of overhead. Historically, the Company’s operating margins have been impacted favorably to the extent its costs and expenses are leveraged over a large installed customer base. However, there can be no assurances as to the Company’s ability to maintain a large installed customer base or ability to sustain its historical operating margins.
Recent Developments
Dividends
On September 19, 2025, the Company announced that the Board of Directors declared a quarterly cash dividend of $0.485 per common share for the quarter ended September 30, 2025, an increase of 2% over the prior year’s comparable quarter.
Business Outlook
Macroeconomic conditions, such as a volatile interest rate environment, ongoing inflation, the geopolitical landscape, and foreign exchange rate fluctuations, continue to impact the global economy. In addition, recent changes in legislation and regulations, including enacted and proposed tariffs and other trade policies, have introduced additional uncertainty in the global economy. The ongoing federal government shutdown, along with other recent political and fiscal developments in the United States, has further increased uncertainty in the economic environment and may negatively impact customer confidence, project funding and the timing of new business activity. In periods of perceived or actual unfavorable economic conditions, our customers or potential customers could delay or re-evaluate their decisions to initiate various projects which in turn could result in a delay or cessation of engagement or other business activities with us. These factors also make it difficult for us to forecast and plan future budgetary decisions or business activities accurately. Our operating results could be materially impacted by changes in the overall macroeconomic environment and other economic factors.
22
Results of Operations
Three Months Ended September 30, 2025 Compared to
Three Months Ended September 30, 2024
Overview
Consolidated revenues for the three months ended September 30, 2025, decreased 4% to $256.4 million, from $266.8 million for the same period in 2024. Consolidated net income for the three months ended September 30, 2025, decreased 72% to $42.3 million, from $149.3 million for the same period in 2024. Earnings per diluted share for the three months ended September 30, 2025, decreased by $4.36 to $1.72, compared to $6.08 for the same period in 2024. The decrease in consolidated net income and earnings per diluted share during the period was primarily attributed to the terminated Merger Agreement in 2024 which provided a $180.0 million gain on merger termination, partly offset by $39.4 million in transaction costs, net of provision for income taxes. Excluding the gain and transaction costs attributed to the merger termination in the current year, the Company's consolidated net income decreased by approximately $3.6 million, or 8%, to $42.3 million, and diluted earnings per share decreased $0.15, or 8%, to $1.72.
For the three months ended September 30, 2025, on a consolidated basis:
• Gross profit decreased $4.7 million, or 4%, to $119.3 million in 2025. Mobile Modular’s gross profit decreased $6.7 million, or 7%, largely due to lower gross profit on sales and rental operations revenues. Portable Storage's gross profit decreased $0.7 million, or 5%, primarily due to lower gross profit on rental operations revenues. TRS-RenTelco’s gross profit increased $2.8 million, or 20%, primarily due to higher gross profit on rental revenues. Enviroplex’s gross profit was $4.5 million, representing a 1% decrease compared to the same period in 2024.
• Selling and administrative expenses increased $3.2 million to $52.5 million, primarily due to a $1.6 million increase in marketing and administrative expenses and $1.3 million higher employees' salaries and benefit costs during the period.
• During the three months ended September 30, 2024, the Company incurred $39.4 million in transaction costs related to the Merger Agreement with Willscot Mobile Mini that was terminated September 20, 2024. These significant costs that did not recur during the three months ended September 30, 2025, are reported separately on the Company’s condensed consolidated statements of income.
• Interest expense decreased $4.5 million to $8.2 million, which was primarily attributed to $199.4 million lower average debt levels of the Company and a lower effective interest rate in 2025 of 5.81%, compared to 6.63% for the same period in 2024. The 26% decrease in average debt when compared to 2024 was primarily attributed to lower rental equipment purchases in 2025 and the proceeds received in 2024 from the terminated merger with WillScot Mobile Mini after transaction costs and income taxes.
• Pre-tax income contribution by Mobile Modular, Portable Storage and TRS-RenTelco was 70%, 10% and 15%, respectively, compared to 71%, 12% and 9%, respectively, for the comparable 2024 period. These results are discussed on a segment basis below. Enviroplex pre-tax income contribution was 5% in both periods.
• The provision for income taxes resulted in an effective tax rate of 27.7% and 26.4%, for the quarters ended September 30, 2025 and 2024, respectively.
• Adjusted EBITDA decreased $7.5 million, or 7%, to $96.5 million in 2025.
23
Mobile Modular
For the three months ended September 30, 2025, Mobile Modular’s total revenues decreased $9.9 million, or 5%, to $181.5 million compared to the same period in 2024, primarily due to lower sales revenues. The sales revenue decrease, together with lower gross profit on sales and rental operations revenues, and $1.4 million higher selling and administrative expenses, resulted in a $4.7 million decrease in pre-tax income to $41.1 million for the three months ended September 30, 2025, from $45.8 million for the same period in 2024.
The following table summarizes results for each revenue and gross profit category, income from operations, pre-tax income and other selected information.
Mobile Modular – Three Months Ended 9/30/25 compared to Three Months Ended 9/30/24 (Unaudited)
(dollar amounts in thousands)
Three Months Ended
September 30,
Increase (Decrease)
2025
2024
$
%
Revenues
Rental
$
83,168
$
81,508
$
1,660
2
%
Rental related services
44,544
42,396
2,148
5
%
Rental operations
127,712
123,904
3,808
3
%
Sales
52,334
65,994
(13,660
)
(21
)%
Other
1,422
1,509
(87
)
(6
)%
Total revenues
181,468
191,407
(9,939
)
(5
)%
Costs and Expenses
Direct costs of rental operations:
Depreciation of rental equipment
10,810
10,124
686
7
%
Rental related services
29,809
27,366
2,443
9
%
Other
24,199
20,549
3,650
18
%
Total direct costs of rental operations
64,818
58,039
6,779
12
%
Costs of sales
33,558
43,595
(10,037
)
(23
)%
Total costs of revenues
98,376
101,634
(3,258
)
(3
)%
Gross Profit
Rental
48,159
50,835
(2,676
)
(5
)%
Rental related services
14,735
15,030
(295
)
(2
)%
Rental operations
62,894
65,865
(2,971
)
(5
)%
Sales
18,776
22,399
(3,623
)
(16
)%
Other
1,422
1,509
(87
)
(6
)%
Total gross profit
83,092
89,773
(6,681
)
(7
)%
Expenses:
Selling and administrative expenses
35,389
34,028
1,361
4
%
Income from operations
47,703
55,745
(8,042
)
(14
)%
Interest expense allocation
6,597
9,979
(3,382
)
(34
)%
Pre-tax income
$
41,106
$
45,766
$
(4,660
)
(10
)%
Other Selected Information
Adjusted EBITDA
$
64,573
$
71,420
(6,847
)
(10
)%
Average rental equipment 1
$
1,328,245
$
1,240,950
$
87,295
7
%
Average rental equipment on rent
$
963,917
$
956,245
$
7,672
1
%
Average monthly total yield 2
2.09
%
2.19
%
(5
)%
Average utilization 3
72.6
%
77.1
%
(6
)%
Average monthly rental rate 4
2.88
%
2.84
%
1
%
Period end rental equipment 1
$
1,341,377
$
1,259,179
$
82,198
7
%
Period end utilization 3
71.9
%
76.5
%
(6
)%
1. Average and Period end rental equipment represents the cost of rental equipment, excluding new equipment inventory and accessory equipment.
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. Period end utilization is calculated by dividing the cost of rental equipment on rent by the total cost of rental equipment, excluding new equipment inventory and accessory equipment. Average utilization for the period is calculated using the average month end 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.
nm = Not meaningful
24
Mobile Modular’s gross profit for the three months ended September 30, 2025, decreased $6.7 million, or 7%, to $83.1 million. For the three months ended September 30, 2025, compared to the same period in 2024:
• Gross Profit on Rental Revenues – Rental revenues increased $1.7 million, or 2%, due to 1% higher average rental equipment on rent and 1% higher average monthly rental rates in 2025. As a percentage of rental revenues, depreciation was 13% in 2025 and 12% in 2024, and other direct costs were 29% and 25% in 2025 and 2024, respectively, which resulted in gross margin percentages of 58% in 2025, compared to 62% in 2024. The increase in other direct costs was primarily due to higher labor and material costs incurred during 2025 to prepare equipment to meet customer rental demand. The higher rental revenues, offset by lower rental margins, resulted in gross profit on rental revenues decreasing $2.7 million, or 5%, to $48.2 million in 2025.
• Gross Profit on Rental Related Services – Rental related services revenues increased $2.1 million, or 5%, compared to 2024. The increase in rental related services revenues was primarily attributable to higher site related services when compared to 2024. The increase in revenues together with lower gross margin percentage of 33% in 2025, compared to 35% in 2024, resulted in rental related services gross profit decreasing $0.3 million, or 2%, to $14.7 million in 2025.
• Gross Profit on Sales – Sales revenues decreased $13.7 million, or 21%, compared to 2024, due to lower new equipment sales. The higher gross margin percentage of 36% in 2025 compared to 34% in 2024, together with lower sales revenues, resulted in gross profit on sales decreasing $3.6 million, or 16%, to $18.8 million. The higher gross margin on sales in 2025 was primarily due to a higher mix of used versus new sales. Sales occur routinely as a normal part of Mobile Modular’s rental business; however, these sales and related gross margins can fluctuate from quarter to quarter and year to year depending on customer requirements, the scope of work to be performed, equipment availability and funding.
For the three months ended September 30, 2025, selling and administrative expenses increased $1.4 million, or 4%, to $35.4 million, primarily due to $1.2 million higher allocated corporate expenses when compared to 2024.
25
Portable Storage
For the three months ended September 30, 2025, Portable Storage’s total revenues increased $1.4 million, or 6%, to $24.4 million compared to the same period in 2024, primarily due to higher rental and sales revenues, partly offset by lower rental related services revenues. Lower gross profit on rental operations revenues, higher gross profit on sales revenues, coupled with higher selling and administrative expenses and lower allocated interest expense, resulted in a decrease in pre-tax income of $1.5 million, or 20%, to $5.9 million in 2025.
The following table summarizes results for each revenue and gross profit category, income from operations, pre-tax income and other selected information.
Portable Storage – Three Months Ended 9/30/25 compared to Three Months Ended 9/30/24 (Unaudited)
(dollar amounts in thousands)
Three Months Ended
September 30,
Increase (Decrease)
2025
2024
$
%
Revenues
Rental
$
17,293
$
17,040
$
253
1
%
Rental related services
4,187
4,405
(218
)
(5
)%
Rental operations
21,480
21,445
35
0
%
Sales
2,693
1,411
1,282
91
%
Other
229
195
34
17
%
Total revenues
24,402
23,051
1,351
6
%
Costs and Expenses
Direct costs of rental operations:
Depreciation of rental equipment
1,056
1,006
50
5
%
Rental related services
4,739
4,280
459
11
%
Other
2,191
1,327
864
65
%
Total direct costs of rental operations
7,986
6,613
1,373
21
%
Costs of sales
1,629
906
723
80
%
Total costs of revenues
9,615
7,519
2,096
28
%
Gross Profit (Loss)
Rental
14,046
14,707
(661
)
(4
)%
Rental related services
(552
)
125
(677
)
nm
Rental operations
13,494
14,832
(1,338
)
(9
)%
Sales
1,064
505
559
111
%
Other
229
195
34
17
%
Total gross profit
14,787
15,532
(745
)
(5
)%
Expenses:
Selling and administrative expenses
7,912
6,790
1,122
17
%
Income from operations
6,875
8,742
(1,867
)
(21
)%
Interest expense allocation
994
1,388
(394
)
(28
)%
Pre-tax income
$
5,881
$
7,354
$
(1,473
)
(20
)%
Other Selected Information
Adjusted EBITDA
$
9,245
$
10,796
$
(1,551
)
(14
)%
Average rental equipment 1
$
237,227
$
229,231
$
7,996
3
%
Average rental equipment on rent
$
145,533
$
144,000
$
1,533
1
%
Average monthly total yield 2
2.43
%
2.48
%
(2
)%
Average utilization 3
61.4
%
62.8
%
(2
)%
Average monthly rental rate 4
3.96
%
3.94
%
1
%
Period end rental equipment 1
$
238,132
$
230,261
$
7,871
3
%
Period end utilization 3
62.1
%
62.0
%
0
%
1. Average and Period end rental equipment represents the cost of rental equipment, excluding new equipment inventory and accessory equipment.
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. Period end utilization is calculated by dividing the cost of rental equipment on rent by the total cost of rental equipment, excluding new rental equipment inventory and accessory equipment. Average utilization for the period is calculated using the average month end 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.
26
nm = Not meaningful
Portable Storage’s gross profit for the three months ended September 30, 2025, decreased $0.7 million, or 5%, to $14.8 million. For the three months ended September 30, 2025, compared to the same period in 2024:
• Gross Profit on Rental Revenues – Rental revenues increased $0.3 million, or 1%, due to 1% higher average rental equipment on rent and 1% higher average monthly rental rates in 2025 as compared to 2024. As a percentage of rental revenues, depreciation was 6% in both 2025 and 2024, and other direct costs were 13% and 8% in 2025 and 2024, respectively, which resulted in gross margin percentages of 81% and 86% in 2025 and in 2024, respectively. The higher rental revenues, offset by lower rental margins resulted in gross profit on rental revenues decreasing $0.7 million, or 4%, to $14.0 million in 2025.
• Gross Profit on Rental Related Services – Rental related services revenues decreased $0.2 million, or 5%, to $4.2 million in 2025. The gross margin on rental related services revenues was negative 13% in 2025, compared to 3% in 2024. The lower revenues coupled with lower gross margins in 2025, resulted in rental related services gross profit decreasing $0.7 million, when compared to 2024.
• Gross Profit on Sales – Sales revenues increased $1.3 million, primarily due to higher used equipment sales. The higher sales revenues and higher gross margins of 40% in 2025, compared to 36% in 2024, resulted in sales gross profit increasing $0.6 million to $1.1 million in 2025. Sales occur routinely as a normal part of Portable Storage’s rental business; however, these sales can fluctuate from period to period depending on customer requirements, equipment availability and funding.
For the three months ended September 30, 2025, Portable Storage’s selling and administrative expenses increased $1.1 million, or 17%, to $7.9 million, primarily due to a $0.5 million increase in employee salaries and benefits and $0.3 million higher allocated corporate expenses when compared to 2024.
27
TRS-RenTelco
For the three months ended September 30, 2025, TRS-RenTelco’s total revenues increased $2.1 million, or 6%, to $36.9 million, compared to the same period in 2024, primarily due to higher rental revenues. Higher gross profit on rental and sales revenues, together with higher selling and administrative expenses and a decrease in allocated interest expense, resulted in a 48% increase in pre-tax income to $8.5 million for the three months ended September 30, 2025, from $5.7 million for the same period in 2024.
The following table summarizes results for each revenue and gross profit category, income from operations, pre-tax income and other selected information.
TRS-RenTelco – Three Months Ended 9/30/25 compared to Three Months Ended 9/30/24 (Unaudited)
(dollar amounts in thousands)
Three Months Ended
September 30,
Increase (Decrease)
2025
2024
$
%
Revenues
Rental
$
28,027
$
25,655
$
2,372
9
%
Rental related services
891
900
(9
)
(1
)%
Rental operations
28,918
26,555
2,363
9
%
Sales
7,347
7,604
(257
)
(3
)%
Other
624
642
(18
)
(3
)%
Total revenues
36,889
34,801
2,088
6
%
Costs and Expenses
Direct costs of rental operations:
Depreciation of rental equipment
10,002
10,851
(849
)
(8
)%
Rental related services
874
793
81
10
%
Other
5,918
5,376
542
10
%
Total direct costs of rental operations
16,794
17,020
(226
)
(1
)%
Costs of sales
3,231
3,688
(457
)
(12
)%
Total costs of revenues
20,025
20,708
(683
)
(3
)%
Gross Profit
Rental
12,107
9,428
2,679
28
%
Rental related services
17
107
(90
)
(84
)%
Rental operations
12,124
9,535
2,589
27
%
Sales
4,116
3,916
200
5
%
Other
624
642
(18
)
(3
)%
Total gross profit
16,864
14,093
2,771
20
%
Expenses:
Selling and administrative expenses
7,113
6,627
486
7
%
Income from operations
9,751
7,466
2,285
31
%
Interest expense allocation
1,250
1,949
(699
)
(36
)%
Foreign currency exchange loss (gain)
32
(216
)
(248
)
nm
Pre-tax income
$
8,469
$
5,733
$
2,736
48
%
Other Selected Information
Adjusted EBITDA
$
20,212
$
18,945
$
1,267
7
%
Average rental equipment 1
$
333,045
$
362,431
$
(29,386
)
(8
)%
Average rental equipment on rent
$
215,879
$
207,788
$
8,091
4
%
Average monthly total yield 2
2.81
%
2.36
%
19
%
Average utilization 3
64.8
%
57.3
%
13
%
Average monthly rental rate 4
4.33
%
4.12
%
5
%
Period end rental equipment 1
$
335,482
$
354,183
$
(18,701
)
(5
)%
Period end utilization 3
64.1
%
59.0
%
9
%
1. Average and Period end rental equipment represents the cost of rental equipment, excluding new equipment inventory and accessory equipment.
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. Period end utilization is calculated by dividing the cost of rental equipment on rent by the total cost of rental equipment, excluding new rental equipment inventory and accessory equipment. Average utilization for the period is calculated using the average month end 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.
nm = Not meaningful
28
TRS-RenTelco’s gross profit for the three months ended September 30, 2025 increased $2.8 million, or 20%, to $16.9 million. For the three months ended September 30, 2025 compared to the same period in 2024:
• Gross Profit on Rental Revenues – Rental revenues increased $2.4 million, or 9%, depreciation expense decreased $0.8 million, or 8%, and other direct costs increased by $0.5 million, or 10%, resulting in a 28% increase in gross profit on rental revenues to $12.1 million. As a percentage of rental revenues, depreciation was 36% and 42% in 2025 and 2024, respectively, and other direct costs were 21% in both 2025 and 2024, which resulted in a gross margin percentage of 43% and 37% in 2025 and 2024, respectively. The increase in rental revenues was due to a 4% increase in average rental equipment on rent and 5% higher average monthly rental rates in 2025, as compared to 2024.
• Gross Profit on Sales – Sales revenues decreased $0.3 million, or 3%, to $7.3 million in 2025. Gross profit on sales increased $0.2 million, or 5%, to $4.1 million, with gross margin percentages of 56% and 52% in 2025 and 2024, respectively. Sales occur as a normal part of TRS-RenTelco’s rental business; however, these sales and related gross margins can fluctuate from quarter to quarter depending on customer requirements and related mix of equipment sold, equipment availability and funding.
For the three months ended September 30, 2025, selling and administrative expenses increased $0.5 million, or 7%, to $7.1 million. The increase was primarily attributed to $0.4 million higher allocated corporate expenses when compared to 2024.
29
Nine Months Ended September 30, 2025 Compared to
Nine Months Ended September 30, 2024
Overview
Consolidated revenues for the nine months ended September 30, 2025, increased 3% to $687.5 million, from $667.2 million for the same period in 2024. Consolidated net income for the nine months ended September 30, 2025, decreased 45% to $106.5 million, from $192.8 million for the same period in 2024. Earnings per diluted share for the nine months ended September 30, 2025, decreased $3.52 to $4.32, compared to $7.85 for the same period in 2024. The decrease in consolidated net income and earnings per diluted share during the period was primarily attributed to the terminated Merger Agreement which provided a $180.0 million gain on merger termination, partly offset by $61.2 million in transaction costs, net of provision for income taxes. Excluding the gain and transaction costs attributed to the merger termination in the prior year, the Company's net income increased by approximately $1.3 million, or 1%, to $106.5 million, and diluted earnings per share increased $0.04, or 1%, to $4.32. Additionally, in 2024 the Company reported Other income, net of $9.3 million from the sale of a corporate property, which further contributed to the period-over-period change in net income and diluted earnings per share.
For the nine months ended September 30, 2025, on a consolidated basis:
• Gross profit increased $5.7 million, or 2%, to $326.4 million in 2025. Mobile Modular’s gross profit decreased $1.1 million, or 1%, primarily due to lower gross profit on sales revenues, partly offset by higher gross profit on rental operations revenues. Portable Storage's gross profit decreased $5.2 million, or 11%, primarily due to lower gross profit on rental operations revenues. TRS-RenTelco’s gross profit increased $7.2 million, or 17%, primarily due to higher gross profit on rental revenues. Enviroplex’s gross profit increased $4.9 million due to higher sales revenue and an increase in sales margins in 2025.
• Selling and administrative expenses increased $8.2 million to $157.0 million, primarily due to $3.8 million higher employees' salaries and benefit costs and $2.6 million higher marketing and administrative expenses.
• During the nine months ended September 30, 2024, the Company incurred $61.2 million in transaction costs related to the Merger Agreement with Willscot Mobile Mini that was terminated on September 20, 2024. These significant costs are reported separately on the Company’s condensed consolidated statements of income.
• Interest expense decreased $14.3 million to $24.1 million, which was primarily attributed to $209.9 million lower average debt levels of the Company and a lower effective interest rate in 2025 of 5.69% compared to 6.60% for the same period in 2024. The 27% decrease in average debt when compared to 2024 was primarily the result of lower rental equipment purchases in 2025 and the $180.0 million payment received from the terminated merger with WillScot Mobile Mini, net of transaction costs and income taxes, which was primarily used to pay down existing debt obligations.
• Pre-tax income contribution by Mobile Modular, Portable Storage and TRS-RenTelco was 66%, 12% and 16%, respectively, compared to 69%, 17% and 11%, respectively, for the comparable 2024 period. These results are discussed on a segment basis below. Enviroplex pre-tax income contribution was 6% and 3% in 2025 and 2024, respectively.
• The provision for income taxes resulted in an effective tax rate of 26.8% and 26.3%, for the periods ended September 30, 2025 and 2024, respectively.
• Adjusted EBITDA decreased $2.2 million, or 1%, to $257.6 million in 2025.
30
Mobile Modular
For the nine months ended September 30, 2025, Mobile Modular’s total revenues increased $5.8 million, or 1%, to $469.4 million compared to the same period in 2024, due to higher rental operations revenues, partly offset by lower sales revenues. The total revenue increase, together with higher gross profit on rental operations revenues, lower gross profit on sales revenues, higher selling and administrative expenses and lower allocated interest expense, resulted in a $2.2 million decrease in pre-tax income to $96.1 million for the nine months ended September 30, 2025, from $98.3 million for the same period in 2024. Included within pre-tax income for the period ended September 30, 2024, was Other income, net of $6.2 million which contributed to the period-over-period change. In 2024, Other income, net was comprised of an allocated net gain on sale of a corporate property. Excluding Other income, net, the total change in pre-tax income for 2025 was an increase of $4.1 million, or 4%.
The following table summarizes results for each revenue and gross profit category, income from operations, pre-tax income and other selected information.
Mobile Modular – Nine Months Ended 9/30/25 compared to Nine Months Ended 9/30/24 (Unaudited)
(dollar amounts in thousands)
Nine Months Ended
September 30,
Increase (Decrease)
2025
2024
$
%
Revenues
Rental
$
243,572
$
236,040
$
7,532
3
%
Rental related services
106,191
95,450
10,741
11
%
Rental operations
349,763
331,490
18,273
6
%
Sales
115,308
127,251
(11,943
)
(9
)%
Other
4,303
4,795
(492
)
(10
)%
Total revenues
469,374
463,536
5,838
1
%
Costs and Expenses
Direct costs of rental operations:
Depreciation of rental equipment
32,105
29,994
2,111
7
%
Rental related services
69,999
62,974
7,025
11
%
Other
69,001
64,487
4,514
7
%
Total direct costs of rental operations
171,105
157,455
13,650
9
%
Costs of sales
76,483
83,180
(6,697
)
(8
)%
Total costs of revenues
247,588
240,635
6,953
3
%
Gross Profit
Rental
142,466
141,559
907
1
%
Rental related services
36,192
32,476
3,716
11
%
Rental operations
178,658
174,035
4,623
3
%
Sales
38,825
44,071
(5,246
)
(12
)%
Other
4,303
4,795
(492
)
(10
)%
Total gross profit
221,786
222,901
(1,115
)
(1
)%
Expenses:
Selling and administrative expenses
106,154
100,882
5,272
5
%
Other income, net
—
(6,220
)
(6,220
)
nm
Income from operations
115,632
128,239
(12,607
)
(10
)%
Interest expense allocation
19,509
29,951
(10,442
)
(35
)%
Pre-tax income
$
96,123
$
98,288
$
(2,165
)
(2
)%
Other Selected Information
Adjusted EBITDA
$
165,290
$
168,165
$
(2,875
)
(2
)%
Average rental equipment 1
$
1,304,716
$
1,206,361
$
98,355
8
%
Average rental equipment on rent
$
960,541
$
940,878
$
19,663
2
%
Average monthly total yield 2
2.07
%
2.17
%
(5
)%
Average utilization 3
73.6
%
78.0
%
(6
)%
Average monthly rental rate 4
2.82
%
2.79
%
1
%
Period end rental equipment 1
$
1,341,377
$
1,259,179
$
82,198
7
%
Period end utilization 3
71.9
%
76.5
%
(6
)%
1. Average and Period end rental equipment represents the cost of rental equipment, excluding new equipment inventory and accessory equipment.
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. Period end utilization is calculated by dividing the cost of rental equipment on rent by the total cost of rental equipment, excluding new rental equipment inventory and accessory equipment. Average utilization for the period is calculated using the average month end costs of rental equipment.
31
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.
nm = Not meaningful
Mobile Modular’s gross profit for the nine months ended September 30, 2025, decreased $1.1 million, or 1%, to $221.8 million. For the nine months ended September 30, 2025, compared to the same period in 2024:
• Gross Profit on Rental Revenues – Rental revenues increased $7.5 million, or 3%, due to 2% higher average rental equipment on rent and 1% higher average monthly rental rates in 2025. As a percentage of rental revenues, depreciation was 13% in both 2025 and 2024, and other direct costs were 28% in 2025 and 27% in 2024, which resulted in gross margin percentages of 58% in 2025, compared to 60% in 2024. The higher rental revenues, partly offset by lower rental margins, resulted in gross profit on rental revenues increasing $0.9 million, or 1%, to $142.5 million in 2025.
• Gross Profit on Rental Related Services – Rental related services revenues increased $10.7 million, or 11%, compared to 2024. The increase in rental related services revenues was primarily attributable to higher site related services and delivery revenues, partly offset by lower return delivery and dismantle revenues. The increase in revenues accompanied by a comparable gross margin percentage of 34% in 2025, resulted in rental related services gross profit increasing $3.7 million, or 11%, to $36.2 million in 2025.
• Gross Profit on Sales – Sales revenues decreased $11.9 million, or 9%, compared to 2024, due to lower new equipment sales. The lower gross margin percentage of 34% in 2025 compared to 35% in 2024, coupled with lower sales revenue, resulted in gross profit on sales decreasing $5.2 million, or 12%, to $38.8 million. The lower total gross margin on sales in 2025 was primarily due to a reduction in new equipment sales margins. Sales occur routinely as a normal part of Mobile Modular’s rental business; however, these sales and related gross margins can fluctuate from quarter to quarter and year to year depending on customer requirements, the scope of work to be performed, equipment availability and funding.
For the nine months ended September 30, 2025, selling and administrative expenses increased $5.3 million, or 5%, to $106.2 million, primarily due to $2.7 million higher allocated corporate expenses, an increase in employees' salaries and benefit costs of $1.0 million and $0.9 million higher marketing and administrative expenses.
32
Portable Storage
For the nine months ended September 30, 2025, Portable Storage’s total revenues decreased $2.8 million, or 4%, to $69.0 million compared to the same period in 2024, primarily due to lower rental operations revenues, partly offset by higher sales revenues. Lower gross profit on rental operations revenues, partly offset by $1.4 million lower allocated interest expense, resulted in a decrease in pre-tax income of $6.0 million, or 25%, to $17.9 million in 2025. Included within pre-tax income for the period ended September 30, 2024, was Other income, net of $1.3 million which contributed to the period-over-period change. In 2024, Other income, net was comprised of an allocated net gain on sale of a corporate property. Excluding Other income, net, the total change in pre-tax income for 2025 was a decrease of $4.7 million, or 21%.
The following table summarizes results for each revenue and gross profit category, income from operations, pre-tax income and other selected information.
Portable Storage – Nine Months Ended 9/30/25 compared to Nine Months Ended 9/30/24 (Unaudited)
(dollar amounts in thousands)
Nine Months Ended
September 30,
Increase (Decrease)
2025
2024
$
%
Revenues
Rental
$
50,307
$
53,270
$
(2,963
)
(6
)%
Rental related services
12,212
13,768
(1,556
)
(11
)%
Rental operations
62,519
67,038
(4,519
)
(7
)%
Sales
5,649
3,889
1,760
45
%
Other
846
907
(61
)
(7
)%
Total revenues
69,014
71,834
(2,820
)
(4
)%
Costs and Expenses
Direct costs of rental operations:
Depreciation of rental equipment
3,125
2,971
154
5
%
Rental related services
12,976
13,212
(236
)
(2
)%
Other
5,636
4,322
1,314
30
%
Total direct costs of rental operations
21,737
20,505
1,232
6
%
Costs of sales
3,509
2,390
1,119
47
%
Total costs of revenues
25,246
22,895
2,351
10
%
Gross Profit (Loss)
Rental
41,546
45,977
(4,431
)
(10
)%
Rental related services
(764
)
556
(1,320
)
nm
Rental operations
40,782
46,533
(5,751
)
(12
)%
Sales
2,140
1,499
641
43
%
Other
846
907
(61
)
(7
)%
Total gross profit
43,768
48,939
(5,171
)
(11
)%
Expenses:
Selling and administrative expenses
23,014
22,064
950
4
%
Other income, net
—
(1,319
)
(1,319
)
nm
Income from operations
20,754
28,194
(7,440
)
(26
)%
Interest expense allocation
2,847
4,255
(1,408
)
(33
)%
Pre-tax income
$
17,907
$
23,939
$
(6,032
)
(25
)%
Other Selected Information
Adjusted EBITDA
$
27,666
$
33,333
$
(5,667
)
(17
)%
Average rental equipment 1
$
234,957
$
226,373
$
8,584
4
%
Average rental equipment on rent
$
142,830
$
149,705
$
(6,875
)
(5
)%
Average monthly total yield 2
2.38
%
2.61
%
(9
)%
Average utilization 3
60.8
%
66.1
%
(8
)%
Average monthly rental rate 4
3.91
%
3.95
%
(1
)%
Period end rental equipment 1
$
238,132
$
230,261
$
7,871
3
%
Period end utilization 3
62.1
%
62.0
%
0
%
1. Average and Period end rental equipment represents the cost of rental equipment, excluding new equipment inventory and accessory equipment.
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. Period end utilization is calculated by dividing the cost of rental equipment on rent by the total cost of rental equipment, excluding new rental equipment inventory and accessory equipment. Average utilization for the period is calculated using the average month end costs of rental equipment.
33
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.
nm = Not meaningful
Portable Storage’s gross profit for the nine months ended September 30, 2025, decreased $5.2 million, or 11%, to $43.8 million. For the nine months ended September 30, 2025, compared to the same period in 2024:
• Gross Profit on Rental Revenues – Rental revenues decreased $3.0 million, or 6%, due to 1% lower average monthly rental rates and 5% lower average rental equipment on rent in 2025. As a percentage of rental revenues, depreciation was 6% in both 2025 and 2024, and other direct costs were 11% and 8% in 2025 and 2024, respectively, which resulted in gross margin percentage of 83% and 86% in 2025 and 2024, respectively. The lower rental revenues and lower rental margins resulted in gross profit on rental revenues decreasing $4.4 million, or 10%, to $41.5 million in 2025.
• Gross Profit on Rental Related Services – Rental related services revenues decreased $1.6 million, or 11%, to $12.2 million in 2025. The gross margin on rental related services revenues was negative 6% in 2025, compared to 4% in 2024. The lower revenues coupled with lower gross margins in 2025, resulted in rental related services gross profit decreasing $1.3 million, when compared to 2024.
• Gross Profit on Sales – Sales revenues increased $1.8 million, primarily due to higher used equipment sales. The higher sales revenues and lower gross margins of 38% in 2025, compared to 39% in 2024, resulted in sales gross profit increasing $0.6 million, or 43%, to $2.1 million in 2025. Sales occur routinely as a normal part of Portable Storage’s rental business; however, these sales can fluctuate from period to period depending on customer requirements, equipment availability and funding.
For the nine months ended September 30, 2025, Portable Storage’s selling and administrative expenses increased $1.0 million, or 4%, to $23.0 million, primarily attributable to $0.6 million higher marketing and administrative expenses compared to 2024.
34
TRS-RenTelco
For the nine months ended September 30, 2025, TRS-RenTelco’s total revenues increased $7.1 million to $108.3 million, compared to the same period in 2024, primarily due to higher rental and sales revenues. Higher gross profit on rental and sales revenues, coupled with $2.4 million lower allocated interest expense, resulted in a 40% increase in pre-tax income to $22.6 million for the nine months ended September 30, 2025, from $16.2 million for the same period in 2024. Included within pre-tax income for the period ended September 30, 2024, was Other income, net of $1.7 million which contributed to the period-over-period change. In 2024, Other income, net was comprised of an allocated net gain on sale of a corporate property. Excluding Other income, net, the total change in pre-tax income for 2025 was an increase of $8.2 million, or 56%.
The following table summarizes results for each revenue and gross profit category, income from operations, pre-tax income and other selected information.
TRS-RenTelco – Nine Months Ended 9/30/25 compared to Nine Months Ended 9/30/24 (Unaudited)
(dollar amounts in thousands)
Nine Months Ended
September 30,
Increase (Decrease)
2025
2024
$
%
Revenues
Rental
$
80,707
$
76,398
$
4,309
6
%
Rental related services
2,618
2,422
196
8
%
Rental operations
83,325
78,820
4,505
6
%
Sales
23,039
20,261
2,778
14
%
Other
1,960
2,153
(193
)
(9
)%
Total revenues
108,324
101,234
7,090
7
%
Costs and Expenses
Direct costs of rental operations:
Depreciation of rental equipment
29,569
33,547
(3,978
)
(12
)%
Rental related services
2,237
2,029
208
10
%
Other
16,842
15,373
1,469
10
%
Total direct costs of rental operations
48,648
50,949
(2,301
)
(5
)%
Costs of sales
11,574
9,346
2,228
24
%
Total costs of revenues
60,222
60,295
(73
)
(0
)%
Gross Profit
Rental
34,296
27,478
6,818
25
%
Rental related services
381
393
(12
)
(3
)%
Rental operations
34,677
27,871
6,806
24
%
Sales
11,465
10,915
550
5
%
Other
1,960
2,153
(193
)
(9
)%
Total gross profit
48,102
40,939
7,163
17
%
Expenses:
Selling and administrative expenses
21,871
20,450
1,421
7
%
Other income, net
—
(1,742
)
(1,742
)
nm
Income from operations
26,231
22,231
4,000
18
%
Interest expense allocation
3,660
6,070
(2,410
)
(40
)%
Foreign currency exchange gain
(54
)
(53
)
1
2
%
Pre-tax income
$
22,625
$
16,214
$
6,411
40
%
Other Selected Information
Adjusted EBITDA
$
57,463
$
55,426
$
2,037
4
%
Average rental equipment 1
$
334,389
$
367,137
$
(32,748
)
(9
)%
Average rental equipment on rent
$
212,433
$
208,639
$
3,794
2
%
Average monthly total yield 2
2.68
%
2.31
%
16
%
Average utilization 3
63.5
%
56.8
%
12
%
Average monthly rental rate 4
4.22
%
4.07
%
4
%
Period end rental equipment 1
$
335,482
$
354,183
$
(18,701
)
(5
)%
Period end utilization 3
64.1
%
59.0
%
9
%
1. Average and Period end rental equipment represents the cost of rental equipment, excluding new equipment inventory and accessory equipment.
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. Period end utilization is calculated by dividing the cost of rental equipment on rent by the total cost of rental equipment, excluding new rental equipment inventory and accessory equipment. Average utilization for the period is calculated using the average month end costs of rental equipment.
35
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.
nm = Not meaningful
TRS-RenTelco’s gross profit for the nine months ended September 30, 2025 increased $7.2 million, or 17%, to $48.1 million. For the nine months ended September 30, 2025 compared to the same period in 2024:
• Gross Profit on Rental Revenues – Rental revenues increased $4.3 million, or 6%, depreciation expense decreased $4.0 million, or 12%, and other direct costs increased by $1.5 million, or 10%, resulting in a 25% increase in gross profit on rental revenues to $34.3 million. As a percentage of rental revenues, depreciation was 37% and 44% in 2025 and 2024, respectively, and other direct costs were 21% and 20%, in 2025 and 2024, respectively, which resulted in a gross margin percentage of 42% and 36% in 2025 and 2024, respectively. The increase in rental revenues was due to a 2% increase in average rental equipment on rent and 4% higher average monthly rental rates in 2025, as compared to 2024.
• Gross Profit on Sales – Sales revenues increased $2.8 million, or 14%, to $23.0 million in 2025. Gross profit on sales was $11.5 million, an increase of $0.6 million, or 5%, compared to 2024, with a lower gross margin percentage of 50% in 2025, compared to 54% in 2024. Sales occur as a normal part of TRS-RenTelco’s rental business; however, these sales and related gross margins can fluctuate from quarter to quarter depending on customer requirements and related mix of equipment sold, equipment availability and funding.
For the nine months ended September 30, 2025, selling and administrative expenses increased $1.4 million, or 7%, to $21.9 million. The increase was primarily attributed to $0.9 million higher employees' salaries and benefit costs when compared to 2024.
36
Adjusted EBITDA
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 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 and gains on property sales 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 Net Income to Adjusted EBITDA
(dollar amounts in thousands)
Three Months Ended
September 30,
Nine Months Ended
September 30,
Twelve Months Ended
September 30,
2025
2024
2025
2024
2025
2024
Net income
$
42,297
$
149,317
$
106,479
$
192,778
$
145,428
$
224,799
Provision for income taxes
16,211
53,502
38,900
68,913
51,909
80,586
Interest expense
8,176
12,642
24,130
38,383
32,988
50,509
Depreciation and amortization
26,978
26,693
79,717
80,824
106,348
108,357
EBITDA
93,662
242,154
249,226
380,898
336,673
464,251
Share-based compensation
2,766
2,393
8,088
6,949
10,641
9,951
Transaction costs 3
98
39,436
253
61,157
2,255
62,732
Other income, net 4
—
—
—
(9,281
)
—
(9,340
)
Gain on merger termination from WillScot Mobile Mini 5
—
(180,000
)
—
(180,000
)
—
(180,000
)
Adjusted EBITDA 1
$
96,526
$
103,983
$
257,567
$
259,723
$
349,569
$
347,594
Adjusted EBITDA margin 2
38
%
39
%
37
%
38
%
38
%
39
%
1. Adjusted EBITDA is defined as income from operations before interest expense, provision for income taxes, depreciation, amortization, share-based compensation, other income, net and non-operating transactions.
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.
37
Reconciliation of Net Cash Provided by Operating Activities to Adjusted EBITDA
(dollar amounts in thousands)
Three Months Ended
September 30,
Nine Months Ended
September 30,
Twelve Months Ended
September 30,
2025
2024
2025
2024
2025
2024
Net cash provided by operating activities
$
65,071
$
198,967
$
174,765
$
337,596
$
211,544
$
313,977
Change in certain assets and liabilities:
Accounts receivable, net
7,545
7,150
22,004
(2,839
)
16,817
6,365
Inventories, prepaid expenses and other assets
(2,261
)
(14,171
)
1,002
(19,988
)
14,103
1,948
Accounts payable and accrued liabilities
8,588
(123,241
)
18,854
(104,293
)
(5,834
)
(119,382
)
Deferred income
(5,378
)
10,699
(20,502
)
(12,497
)
(6,413
)
(18,681
)
Amortization of debt issuance costs
(159
)
(2
)
(204
)
(6
)
(264
)
(8
)
Foreign currency exchange (loss) gain
(32
)
216
54
53
(214
)
197
Gain on sale of used rental equipment
13,514
9,648
30,188
25,185
40,088
33,863
Income taxes paid, net of refunds received
751
773
6,537
(3,826
)
46,887
78,192
Interest paid
8,887
13,944
24,869
40,338
32,855
51,123
Adjusted EBITDA 1
$
96,526
$
103,983
$
257,567
$
259,723
$
349,569
$
347,594
1. Adjusted EBITDA is defined as income from operations before interest expense, provision for income taxes, depreciation, amortization, share-based compensation, other income, net and non-operating transactions.
Adjusted EBITDA is a component of two restrictive financial covenants for the Company’s unsecured Credit Facility, the Note Purchase Agreement, Series D Senior Notes, Series E Senior Notes, Series F Senior Notes and Series G Senior Notes (as defined and more fully described under the heading “Liquidity and Capital Resources” in this MD&A). These instruments contain financial covenants requiring the Company to not:
• Permit the Consolidated Fixed Charge Coverage Ratio (as defined in the Credit Facility and the Note Purchase Agreement (as defined and more fully described under the heading “Liquidity and Capital Resources” in this MD&A)) of Adjusted EBITDA (as defined in the Credit Facility and the Note Purchase Agreement) to fixed charges as of the end of any fiscal quarter to be less than 2.50 to 1. At September 30, 2025, the actual ratio was 3.69 to 1.
• Permit the Consolidated Leverage Ratio of funded debt (as defined in the Credit Facility and the Note Purchase Agreement) to Adjusted EBITDA at any time during any period of four consecutive quarters to be greater than 2.75 to 1. At September 30, 2025, the actual ratio was 1.58 to 1.
At September 30, 2025, the Company was in compliance with each of the aforementioned covenants. There are no anticipated trends that the Company is aware of that would indicate non-compliance with these covenants, although, significant deterioration in our financial performance could impact the Company’s ability to comply with these covenants.
Liquidity and Capital Resources
The Company’s rental businesses are capital intensive and generate significant cash flows. Cash flows for the Company for the nine months ended September 30, 2025 compared to the same period in 2024 are summarized as follows:
Cash Flows from Operating Activities: The Company’s operations provided net cash of $174.8 million in 2025, compared to $337.6 million in 2024. The $162.8 million decrease in net cash provided by operating activities was primarily attributed to the gain on merger termination from Willscot Mobile Mini after transaction costs, which provided $87.6 million of net income in 2024. In addition, there was a $38.6 million decrease in accounts payable as a result of the payment timing of rental equipment acquisitions and other trade accounts payable. Also, accounts receivable increased $24.7 million due to higher customer billings compared to related cash payments in 2025. Finally, the change in Company's prepaid expenses and other assets was $21.8 million primarily due to a higher reduction in prepaid income taxes in 2024.
Cash Flows from Investing Activities: Net cash used in investing activities was $88.1 million in 2025, down from $140.8 million in 2024. The $52.8 million decrease in net cash used was primarily due to $75.8 million lower rental equipment purchases when compared to the previous year, due to higher equipment acquisitions during 2024 to meet customer rental demand. This decrease in investing activities was partly offset by a $22.0 million increase in cash paid for the acquisition of businesses during 2025.
Cash Flows from Financing Activities: Net cash used in financing activities was $80.3 million in 2025, compared to $193.6 million in 2024. The $113.3 million change was primarily attributable to $113.8 million lower net payments under bank lines of credit
38
in 2025, partially offset by $75.0 million in borrowings under issued Series G senior notes in 2025, which were used to pay the principal balance in full of the Company's $73.0 million term note entered into in 2024. The reduction in total net payments under bank lines of credit when compared to the previous year was primarily due to lower cash flows from operations, including the net impact of the gain on merger termination from WillScot Mobile Mini after transaction costs, partly offset by the $75.8 million reduction in purchases of rental equipment when compared to the previous year.
Significant capital expenditures are required to maintain and grow the Company’s rental assets. During the last three years, the Company has financed its working capital and capital expenditure requirements through cash flow from operations, proceeds from the sale of rental equipment and from borrowings. Sales occur routinely as a normal part of the Company’s rental business. However, these sales can fluctuate from period to period depending on customer requirements and funding. Although the net proceeds received from sales may fluctuate from period to period, the Company believes its liquidity will not be adversely impacted from lower sales in any given year because it believes it has the ability to increase its bank borrowings and conserve its cash in the future by reducing the amount of cash it uses to purchase rental equipment, pay dividends, or repurchase the Company’s common stock.
Unsecured Revolving Lines of Credit
On July 15, 2022, the Company entered into an amended and restated credit agreement with Bank of America, N.A., as Administrative Agent, Swing Line Lender, L/C Issuer and lender, and other lenders named therein (the “Credit Facility”). The Credit Facility provides for a $650.0 million unsecured revolving credit facility (which may be further increased to $950.0 million, by adding one or more tranches of term loans and/or increasing the aggregate revolving commitments), which includes a $40.0 million sublimit for the issuance of standby letters of credit and a $20.0 million sublimit for swingline loans. The proceeds of the Credit Facility are available to be used for general corporate purposes, including permitted acquisitions. The Credit Facility permits the Company’s existing indebtedness to remain, which includes the Company’s $20.0 million Treasury Sweep Note due July 15, 2027 and the Company’s existing senior notes issued pursuant to the Note Purchase and Private Shelf Agreement with Prudential Investment Management, Inc., dated as of April 21, 2011 (as amended, the "Prior NPA") comprised of (i) the $40.0 million aggregate outstanding principal of notes issued March 17, 2021 and due March 17, 2028, and (ii) the $60.0 million aggregate outstanding principal of notes issued June 16, 2021 and due June 16, 2026. The Prior NPA was amended and restated, and superseded in its entirety, by the Note Purchase Agreement (as defined and more fully described under the heading "Liquidity and Capital Resources - Note Purchase and Private Shelf Agreement" in this MD&A). In addition, the Company may incur additional senior note indebtedness in an aggregate amount not to exceed $250.0 million. The Credit Facility matures on July 15, 2027 and replaced the Company’s prior $420.0 million credit facility dated March 31, 2020 with Bank of America, N.A., as agent, as amended. All obligations outstanding under the prior credit facility as of the date of the Credit Facility were refinanced by the Credit Facility on April 23, 2022.
On August 19, 2022, the Company entered into an amended and restated Credit Facility Letter Agreement and a Credit Line Note in favor of MUFG Union Bank, N.A., which provides for a $20.0 million line of credit facility related to its cash management services (“Sweep Service Facility”). The Sweep Service Facility matures on the earlier of July 15, 2027, or the date the Company ceases to utilize MUFG Union Bank, N.A. for its cash management services. The Sweep Service Facility replaced the Company’s prior $12.0 million sweep service facility, dated as of March 30, 2020.
On April 23, 2024, the Company entered into a first incremental facility amendment with Bank of America, N.A., as Administrative Agent and the first incremental lender (“BoA”) and the guarantors named therein (the “First Incremental Amendment”). The First Incremental Amendment amends the Second Amended and Restated Credit Agreement, dated as of July 15, 2022, as amended, by and among the Company, BoA, the other lenders named therein, and the guarantors named therein (the “Credit Agreement”) to institute an incremental term loan “A” facility in an aggregate principal amount of $75.0 million (the “Incremental Credit Facility”). The proceeds from the Incremental Credit Facility were used for general corporate purposes. Concurrently with entry into the First Incremental Amendment, the Company repaid revolving loans issued under the Credit Agreement in an aggregate amount equal to approximately $75.0 million. During the quarter ended September 30, 2025, the Company repaid the principal amount of the incremental term loan "A" facility in its entirety.
At September 30, 2025, under the Credit Facility and Sweep Service Facility, the Company had unsecured lines of credit that permit it to borrow up to $650.0 million, of which $301.8 million was outstanding and had capacity to borrow up to an additional $348.2 million. The Credit Facility contains financial covenants requiring the Company to not (all defined terms used below not otherwise defined herein have the meaning assigned to such terms in the Credit Facility):
• Permit the Consolidated Fixed Charge Coverage Ratio as of the end of any fiscal quarter to be less than 2.50 to 1. At September 30, 2025, the actual ratio was 3.69 to 1.
• Permit the Consolidated Leverage Ratio at any time during any period of four consecutive fiscal quarters to be greater than 2.75 to 1. At September 30, 2025, the actual ratio was 1.58 to 1.
39
At September 30, 2025, the Company was in compliance with each of the aforementioned covenants. There are no anticipated trends that the Company is aware of that would indicate non-compliance with these covenants, although significant deterioration in our financial performance could impact the Company’s ability to comply with these covenants.
Note Purchase and Private Shelf Agreement
On June 8, 2023, the Company entered into a Second Amended and Restated Note Purchase and Private Shelf Agreement (the “Note Purchase Agreement”) with PGIM, Inc. (“PGIM”) and the holders of Series D and Series E Notes previously issued pursuant to the Prior NPA. The Note Purchase Agreement amended and restated, and superseded in its entirety, the Prior NPA. Pursuant to the Prior NPA, the Company issued (i) $40.0 million aggregate principal amount of its 2.57% Series D Senior Notes, due March 17, 2028, and (ii) $60.0 million aggregate principal amount of its 2.35% Series E Senior Notes, due June 16, 2026, to which the terms of the Note Purchase Agreement shall apply.
In addition, pursuant to the Note Purchase Agreement, the Company may authorize the issuance and sale of additional senior notes (the “Shelf Notes”) in the aggregate principal amount of (x) $300 million minus (y) the amount of other notes (such as the Series D Senior Notes, Series E Senior Notes, Series F Senior Notes and Series G Senior Notes, each defined below) then outstanding, to be dated the date of issuance thereof, to mature, in case of each Shelf Note so issued, no more than 15 years after the date of original issuance thereof, to have an average life, in the case of each Shelf Note so issued, of no more than 15 years after the date of original issuance thereof, to bear interest on the unpaid balance thereof from the date thereof at the rate per annum, and to have such other particular terms, as shall be set forth, in the case of each Shelf Note so issued, in accordance with the Note Purchase Agreement. Shelf Notes may be issued and sold from time to time at the discretion of the Company’s Board of Directors and in such amounts as the Board of Directors may determine, subject to prospective purchasers’ agreement to purchase the Shelf Notes. The Company will sell the Shelf Notes directly to such purchasers. The full net proceeds of each Shelf Note will be used in the manner described in the applicable Request for Purchase with respect to such Shelf Note.
5.30% Senior Notes Due in 2032
On September 8, 2025, the Company issued and sold to the purchasers $75.0 million aggregate principal amount of 5.30% Series G Notes (the “Series G Senior Notes”) pursuant to the terms of the Note Purchase Agreement.
The Series G Senior Notes are an unsecured obligation of the Company and bear interest at a rate of 5.30% per annum and mature on September 8, 2032. Interest on the Series G Senior Notes is payable semi-annually beginning on March 8, 2026 and continuing thereafter on September 8 and March 8 of each year until maturity. The principal balance is due when the notes mature on September 8, 2032. The full net proceeds from the Series G Senior Notes were used to pay down the Company’s term loan "A" facility in its entirety. At September 30, 2025, the principal balance outstanding under the Series G Senior Notes was $75.0 million.
6.25% Senior Notes Due in 2030
On September 27, 2023, the Company issued and sold to the purchasers $75.0 million aggregate principal amount of 6.25% Series F Notes (the “Series F Senior Notes”) pursuant to the terms of the Note Purchase Agreement.
The Series F Senior Notes are an unsecured obligation of the Company and bear interest at a rate of 6.25% per annum and mature on September 27, 2030. Interest on the Series F Senior Notes became payable semi-annually beginning on March 27, 2024 and continuing thereafter on September 27 and March 27 of each year until maturity. The principal balance is due when the notes mature on September 27, 2030. The full net proceeds from the Series F Senior Notes were primarily used to fulfill the income tax obligations incurred from the divestiture of Adler Tanks. At September 30, 2025, the principal balance outstanding under the Series F Senior Notes was $75.0 million.
2.57% Senior Notes Due in 2028
On March 17, 2021, the Company issued and sold to the purchasers $40.0 million aggregate principal amount of 2.57% Series D Notes (the “Series D Senior Notes”) pursuant to the terms of the Prior NPA.
The Series D Senior Notes are an unsecured obligation of the Company and bear interest at a rate of 2.57% per annum and mature on March 17, 2028. Interest on the Series D Senior Notes is payable semi-annually beginning on September 17, 2021 and continuing thereafter on March 17 and September 17 of each year until maturity. The principal balance is due when the notes mature on March 17, 2028. The full net proceeds from the Series D Senior Notes were used to pay off the Company’s $40 million Series B Senior Notes. At September 30, 2025, the principal balance outstanding under the Series D Senior Notes was $40.0 million.
40
2.35% Senior Notes Due in 2026
On June 16, 2021, the Company issued and sold to the purchasers $60.0 million aggregate principal amount of 2.35% Series E Notes (the "Series E Notes") pursuant to the terms of the Prior NPA.
The Series E Senior Notes are an unsecured obligation of the Company and bear interest at a rate of 2.35% per annum and mature on June 16, 2026. Interest on the Series E Senior Notes is payable semi-annually beginning on December 16, 2021 and continuing thereafter on June 16 and December 16 of each year until maturity. The principal balance is due when the notes mature on June 16, 2026. The full net proceeds from the Series E Senior Notes were used to pay down the Company’s credit facility. At September 30, 2025, the principal balance outstanding under the Series E Senior Notes was $60.0 million.
Among other restrictions, the Note Purchase Agreement, which has superseded in its entirety the Prior NPA, under which the Series D Senior Notes, Series E Senior Notes, Series F Senior Notes and Series G Senior Notes were sold, contains financial covenants requiring the Company to not (all defined terms used below not otherwise defined herein have the meaning assigned to such terms in the Note Purchase Agreement):
• Permit the Consolidated Fixed Charge Coverage Ratio of EBITDA to fixed charges as of the end of any fiscal quarter to be less than 2.50 to 1. At September 30, 2025, the actual ratio was 3.69 to 1.
• Permit the Consolidated Leverage Ratio of funded debt to EBITDA at any time during any period of four consecutive quarters to be greater than 2.75 to 1. At September 30, 2025, the actual ratio was 1.58 to 1.
At September 30, 2025, the Company was in compliance with each of the aforementioned covenants. There are no anticipated trends that the Company is aware of that would indicate non-compliance with these covenants, although significant deterioration in our financial performance could impact the Company’s ability to comply with these covenants.
Although no assurance can be given, the Company believes it will continue to be able to negotiate general bank lines of credit and issue senior notes adequate to meet capital requirements not otherwise met by operational cash flows and proceeds from sales of rental equipment.
Contractual Obligations and Commitments
We believe that our contractual obligations and commitments have not changed materially from those included in our 2024 Annual Report.
Critical Accounting Estimates
There were no material changes in our judgments and assumptions associated with the development of our critical accounting estimates during the nine month period ended September 30, 2025. Refer to our 2024 Annual Report for a discussion of our critical accounting policies and estimates.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes in the Company’s market risk exposures from those reported in our 2024 Annual Report.
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.