McGrath Announces Results for Fourth Quarter 2023 and Announces 33rd Annual Dividend Increase

McGrath RentCorp (“McGrath” or the “Company”) (Nasdaq: MGRC), a leading business-to-business rental company in North America, today announced total revenues from continuing operations for the quarter ended December 31, 2023 of $221.6 million, an increase of 21% compared to the fourth quarter of 2022. The Company reported net income from continuing operations of $32.0 million, or $1.30 per diluted share, for the fourth quarter of 2023, compared to net income from continuing operations of $35.0 million, or $1.43 per diluted share, for the fourth quarter of 2022.

Total revenues from continuing operations for the full year ended December 31, 2023 increased to $831.8 million from $635.7 million in 2022, with adjusted EBITDA increasing $70.8 million, or 28%, to $322.0 million. Net income from continuing operations for the year ended December 31, 2023 was $111.9 million, or $4.56 per diluted share, compared to $103.3 million, or $4.21 per diluted share, in 2022.

The Company also announced that the board of directors declared a cash dividend of $0.475 per share for the upcoming quarter ending March 31, 2024, a quarterly increase of $0.01, or 2%, over the prior year period. The cash dividend will be payable on April 30, 2024 to all shareholders of record on April 16, 2024. This marks 33 consecutive years the Company has increased its annual dividend.

FOURTH QUARTER 2023 YEAR-OVER-YEAR COMPANY HIGHLIGHTS (FROM CONTINUING OPERATIONS):

• Rental revenues increased 19% to $123.6 million.
• Total revenues increased 21% to $221.6 million.
• Adjusted EBITDA¹ increased 12% to $87.9 million.
• Dividend rate of $0.465 per share for the fourth quarter 2023. On an annualized basis, this dividend represents a 1.4% yield on the February 20, 2024 close price of $128.65 per share.

Joe Hanna, President and CEO of McGrath, made the following comments:

“We were pleased with our fourth quarter results. Our 19% increase in companywide rental revenues was driven by strong modular and portable storage performance. Modular rental revenues grew 37%, with approximately two-thirds of the growth attributable to our Vesta Modular acquisition. Portable storage rental revenues grew 13%.

Our modular and portable storage businesses saw broad based rental strength across commercial and education customer bases. We maintained our focus on pricing optimization, rental fleet utilization, and value-added services for our customers. Our initiatives to grow modular sales also showed progress as sales revenues increased 21% compared to a year ago.

TRS-RenTelco experienced continued softness in semiconductor related demand, resulting in 11% lower rental revenues for the quarter, compared to a year ago. During the quarter we reduced new equipment capital spending and made progress with reducing the fleet size to better align with demand conditions.

I am very proud of everything we accomplished in 2023. Our full year revenue and profit growth reflects a diligent focus on execution. We pursued our strategic growth focus on the modular and portable storage businesses with significant organic investment in new fleet, while optimizing pricing and maintaining high fleet utilization. Our growth initiatives for Mobile Modular Plus, Site Related Services and new modular equipment sales all showed significant progress. Vesta Modular was a strong contributor to our successful year, and we completed all our Vesta integration work on schedule by year end.

The recently announced transaction with WillScot Mobile Mini validates the strength of the McGrath business, the hard work and dedication of our team members and the valuable solutions we provide to our customers. We will maintain our independent focus on disciplined operational execution through the transaction close."

DIVISION HIGHLIGHTS:

All comparisons presented below are for the quarter ended December 31, 2023 to the quarter ended December 31, 2022 unless otherwise indicated.

MOBILE MODULAR

For the fourth quarter of 2023, the Company’s Mobile Modular division reported Adjusted EBITDA of $54.1 million, an increase of $11.6 million, or 27%, when compared to the same quarter in 2022.

• Rental revenues increased 37% to $75.9 million, depreciation expense increased 37% to $9.7 million, and other direct costs increased 29% to $18.3 million, which resulted in an increase in gross profit on rental revenues of 41% to $48.0 million.
• Rental related services revenues increased 50% to $30.7 million, primarily attributable to higher delivery and pick-up activities and higher site related services, with associated gross profit increasing 61% to $11.0 million.
• Sales revenues increased 21% to $42.3 million, primarily from higher new equipment sales. Gross margin on sales was 32% for both 2023 and 2022, resulting in a 20% increase in gross profit on sales revenues to $13.6 million.
• Selling and administrative expenses increased $12.9 million to $37.2 million. The increase was primarily attributed to $6.4 million higher salary and benefit costs, mostly related to the increased headcount from the Vesta Modular acquisition and $3.8 million higher allocated corporate expenses.

PORTABLE STORAGE

For the fourth quarter of 2023, the Company’s Portable Storage division reported Adjusted EBITDA of $12.8 million, an increase of $2.2 million, or 20%, when compared to the same quarter in 2022.

• Rental revenues increased 13% to $19.8 million, depreciation expense increased 30% to $0.9 million, and other direct costs decreased 6% to $1.7 million, which resulted in an increase in gross profit on rental revenues of 15% to $17.1 million.
• Rental related services revenues increased 17% to $5.2 million, primarily attributable to higher delivery and return delivery activities, with associated gross profit increasing $0.4 million to $0.5 million.
• Sales revenues increased $0.8 million to $1.7 million, primarily from higher used equipment sales. Gross margin on sales was 38% compared to 30% in 2022, resulting in a $0.4 million increase in gross profit on sales revenues to $0.6 million.
• Selling and administrative expenses increased $1.6 million to $8.3 million, primarily due to higher allocated corporate expenses.

TRS-RENTELCO

For the fourth quarter of 2023, the Company’s TRS-RenTelco division reported Adjusted EBITDA of $20.7 million, a decrease of 18%, when compared to the same quarter in 2022.

• Rental revenues decreased 11% to $27.9 million, depreciation expense decreased 6%, and other direct costs decreased 18%, resulting in a 13% decrease in gross profit on rental revenues to $11.3 million. The rental revenue decrease was primarily due to weakness in the semiconductor related end markets, resulting in lower average rental equipment on rent compared to the prior year.
• Sales revenues decreased 34% to $5.8 million and gross profit on sales revenues decreased 41% to $3.2 million.
• Selling and administrative expenses increased 1%, to $7.4 million, when compared to the prior year.

ABOUT MCGRATH:

McGrath RentCorp (Nasdaq: MGRC) is a leading business-to-business rental company in North America with a strong record of profitable business growth. Founded in 1979, McGrath’s operations are centered on modular solutions through its Mobile Modular and Mobile Modular Portable Storage businesses. In addition, its TRS-RenTelcobusiness offers electronic test equipment rental solutions. The Company’s rental product offerings and services are part of the circular supply economy, helping customers work more efficiently, and sustainably manage their environmental footprint. With over 40 years of experience, McGrath’s success is driven by a focus on exceptional customer experiences. This focus has underpinned the Company’s long-term financial success and supported over 30 consecutive years of annual dividend increases to shareholders, a rare distinction among publicly listed companies.

McGrath is headquartered in Livermore, California. Additional information about McGrath and its businesses is available at mgrc.com and investors.mgrc.com.

You should read this press release in conjunction with the financial statements and notes thereto included in the Company’s latest Forms 10-K, 10-Q and other SEC filings. You can visit the Company’s web site at www.mgrc.com to access information on McGrath RentCorp, including the latest Forms 10-K, 10-Q and other SEC filings.

CONFERENCE CALL NOTE:

As previously announced in its press release of February 1, 2024, McGrath RentCorp will host a conference call at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) on February 21, 2024 to discuss the fourth quarter 2024 results. To participate in the teleconference, dial 1-800-245-3047 (in the U.S.), or 1-203-518-9765 (outside the U.S.), or to listen only, access the simultaneous webcast at the investor relations section of the Company’s website at https://investors.mgrc.com/. A replay will be available for 7 days following the call by dialing 1-800-839-8320 (in the U.S.), or 1-402-220-6072 (outside the U.S.). In addition, a live audio webcast and replay of the call may be found in the investor relations section of the Company’s website at https://investors.mgrc.com/events-and-presentations.

MCGRATH RENTCORP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
		Three Months Ended December 31,								Twelve Months Ended December 31,
(in thousands, except per share amounts)		2023				2022				2023				2022
Revenues
Rental		$	123,563			$	104,075			$	474,336			$	389,663
Rental related services			36,679				25,687				138,160				94,963
Rental operations			160,242				129,762				612,496				484,626
Sales			58,589				52,217				207,165				147,720
Other			2,757				922				12,181				3,319
Total revenues			221,588				182,901				831,842				635,665
Costs and Expenses
Direct costs of rental operations:
Depreciation of rental equipment			22,413				20,307				88,912				80,425
Rental related services			25,003				18,730				96,628				68,846
Other			24,754				21,785				114,942				104,358
Total direct costs of rental operations			72,170				60,822				300,482				253,629
Costs of sales			39,296				33,704				137,727				91,828
Total costs of revenues			111,466				94,526				438,209				345,457
Gross profit			110,122				88,375				393,633				290,208
Selling and administrative expenses			(54,506	)			(39,546	)			(207,539	)			(142,914	)
Other income			59				—				3,618				—
Income from operations			55,675				48,829				189,712				147,294
Interest expense			(12,126	)			(4,173	)			(40,560	)			(12,230	)
Foreign currency exchange gain (loss)			144				26				310				(378	)
Income from continuing operations before provision for income taxes			43,693				44,682				149,462				134,686
Provision for income taxes from continuing operations			11,676				9,690				37,610				31,377
Income from continuing operations			32,017				34,992				111,852				103,309
Discontinued operations:
Income from discontinued operations before provision for income taxes			—				5,984				1,709				15,334
Provision for income taxes from discontinued operations			—				1,335				453				3,505
Gain on sale of discontinued operations, net of tax			—				—				61,513				—
Income from discontinued operations			—				4,649				62,769				11,829
Net income		$	32,017			$	39,641			$	174,621			$	115,138
Earnings per share from continuing operations:
Basic		$	1.31			$	1.44			$	4.57			$	4.24
Diluted		$	1.30			$	1.43			$	4.56			$	4.21
Earnings per share from discontinued operations:
Basic		$	—			$	0.19			$	2.57			$	0.49
Diluted		$	—			$	0.19			$	2.56			$	0.48
Earnings per share:
Basic		$	1.31			$	1.63			$	7.14			$	4.73
Diluted		$	1.30			$	1.62			$	7.12			$	4.70
Shares used in per share calculation:
Basic			24,492				24,384				24,469				24,353
Diluted			24,535				24,527				24,529				24,519
Cash dividends declared per share		$	0.465			$	0.455			$	1.86			$	1.82

MCGRATH RENTCORP
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
		December 31,
(in thousands)		2023				2022
Assets
Cash		$	877			$	957
Accounts receivable, net of allowance for credit losses of $2,801 at December 31, 2023 and $2,300 at December 31, 2022			227,368				169,937
Rental equipment, at cost:
Relocatable modular buildings			1,291,093				938,081
Portable storage containers			236,123				185,187
Electronic test equipment			377,587				398,267
			1,904,803				1,521,535
Less: accumulated depreciation			(575,480	)			(531,218	)
Rental equipment, net			1,329,323				990,317
Property, plant and equipment, net			169,114				138,713
Prepaid expenses and other assets			102,789				69,837
Intangible assets, net			64,588				35,431
Goodwill			323,224				106,403
Assets of discontinued operations			—				196,249
Total assets		$	2,217,283			$	1,707,844
Liabilities and Shareholders' Equity
Liabilities:
Notes payable		$	762,975			$	413,742
Accounts payable and accrued liabilities			167,523				151,208
Deferred income			111,428				82,417
Deferred income taxes, net			241,555				203,361
Liabilities of discontinued operations			—				53,171
Total liabilities			1,283,481				903,899
Shareholders’ equity:
Common stock, no par value - Authorized 40,000 shares
Issued and outstanding - 24,496 shares as of December 31, 2023 and 24,388 shares as of December 31, 2022			111,122				110,080
Retained earnings			822,796				693,943
Accumulated other comprehensive loss			(116	)			(78	)
Total shareholders’ equity			933,802				803,945
Total liabilities and shareholders’ equity		$	2,217,283			$	1,707,844

MCGRATH RENTCORP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
		Twelve Months Ended December 31,
(in thousands)		2023				2022
Cash Flows from Operating Activities:
Net income		$	174,621			$	115,138
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			109,375				111,344
Deferred income taxes			(16,952	)			4,486
Provision for credit losses			2,633				837
Share-based compensation			8,275				8,009
Gain on sale of property, plant and equipment			(3,618	)			—
Gain on sale of discontinued operations			(61,513	)			—
Gain on sale of used rental equipment			(31,642	)			(37,979	)
Foreign currency exchange (gain) loss			(310	)			378
Amortization of debt issuance costs			8				16
Change in:
Accounts receivable			(37,776	)			(31,361	)
Prepaid expenses and other assets			(29,326	)			(16,484	)
Accounts payable and accrued liabilities			(32,526	)			16,347
Deferred income			14,094				23,701
Net cash provided by operating activities			95,343				194,432
Cash Flows from Investing Activities:
Proceeds from sale of discontinued operations			268,012				—
Purchases of rental equipment			(229,679	)			(187,689	)
Purchases of property, plant and equipment			(43,989	)			(17,617	)
Cash paid for acquisition of businesses			(458,315	)			—
Cash paid for acquisition of business assets			(3,767	)			—
Proceeds from sales of used rental equipment			66,168				73,879
Proceeds from sales of property, plant and equipment			9,702				—
Net cash used in investing activities			(391,868	)			(131,427	)
Cash Flows from Financing Activities:
Net borrowings under bank lines of credit			274,225				47,275
Borrowings under senior note purchase agreement			75,000				—
Principal payment of Series C senior notes			—				(60,000	)
Taxes paid related to net share settlement of stock awards			(7,233	)			(6,539	)
Payment of dividends			(45,556	)			(44,269	)
Net cash provided by (used in) financing activities			296,436				(63,533	)
Effect of foreign currency exchange rate changes on cash			9				(6	)
Net increase (decrease) in cash			(80	)			(534	)
Cash balance, beginning of period			957				1,491
Cash balance, end of period		$	877			$	957
Supplemental Disclosure of Cash Flow Information:
Interest paid, during the period		$	38,603			$	14,775
Net income taxes paid, during the period		$	91,565			$	27,362
Dividends accrued during the period, not yet paid		$	12,010			$	11,227
Rental equipment acquisitions, not yet paid		$	16,653			$	13,220

MCGRATH RENTCORP
BUSINESS SEGMENT DATA (unaudited)
Three months ended December 31, 2023
(dollar amounts in thousands)		Mobile Modular				Portable Storage				TRS- RenTelco				Enviroplex				Adler Tanks (Discontinued)				Consolidated
Revenues
Rental		$	75,931			$	19,760			$	27,872			$	—			$	—			$	123,563
Rental related services			30,713				5,150				816				—				—				36,679
Rental operations			106,644				24,910				28,688				—				—				160,242
Sales			42,329				1,696				5,751				8,813				—				58,589
Other			1,686				338				733				—				—				2,875
Total revenues			150,659				26,944				35,172				8,813				—				221,706
Costs and Expenses
Direct costs of rental operations:
Depreciation			9,725				944				11,744				—				—				22,413
Rental related services			19,689				4,651				663				—				—				25,003
Other			18,256				1,699				4,799				—				—				24,754
Total direct costs of rental operations			47,670				7,294				17,206				—				—				72,170
Costs of sales			28,718				1,059				2,577				6,942				—				39,296
Total costs of revenues			76,388				8,353				19,783				6,942				—				111,466
Gross Profit
Rental			47,950				17,117				11,329				—				—				76,396
Rental related services			11,024				499				153				—				—				11,676
Rental operations			58,974				17,616				11,482				—				—				88,072
Sales			13,611				637				3,174				1,871				—				19,293
Other			1,686				338				733				—				—				2,868
Total gross profit			74,271				18,591				15,389				1,871				—				110,122
Selling and administrative expenses			(37,213	)			(8,255	)			(7,386	)			(1,652	)			—				(54,506	)
Other income			38				7				14				—				—				59
Income from operations		$	37,096			$	10,343			$	8,017			$	219				—			$	55,675
Interest expense																							(12,126	)
Foreign currency exchange gain																							144
Provision for income taxes																							(11,676	)
Net income																						$	32,017
Other Information
Adjusted EBITDA 1		$	54,144			$	12,772			$	20,704			$	308				—			$	87,928
Average rental equipment 2		$	1,155,413			$	218,976			$	379,214
Average monthly total yield 3			2.19	%			3.01	%			2.43	%
Average utilization 4			79.7	%			74.8	%			58.9	%
Average monthly rental rate 5			2.75	%			4.02	%			4.16	%

1.		Adjusted EBITDA is defined as net income before interest expense, provision for income taxes, depreciation, amortization, non-cash impairment costs, share-based compensation and transaction costs.
2.		Average rental equipment represents the cost of rental equipment, excluding new equipment inventory and accessory equipment.
3.		Average monthly total yield is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment for the period.
4.		Average utilization is calculated by dividing the average month end costs of rental equipment on rent by the average month end total costs of rental equipment.
5.		Average monthly rental rate is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment on rent for the period.

MCGRATH RENTCORP
BUSINESS SEGMENT DATA (unaudited)
Three months ended December 31, 2022
(dollar amounts in thousands)		Mobile Modular				Portable Storage				TRS- RenTelco				Enviroplex				Adler Tanks (Discontinued)				Consolidated
Revenues
Rental		$	55,230			$	17,460			$	31,385			$	—			$	18,728			$	122,803
Rental related services			20,514				4,390				783				—				8,433				34,120
Rental operations			75,744				21,850				32,168				—				27,161				156,923
Sales			34,923				943				8,726				7,625				698				52,915
Other			337				60				525				—				123				1,045
Total revenues			111,004				22,853				41,419				7,625				27,982				210,883
Costs and Expenses
Direct costs of rental operations:
Depreciation			7,119				724				12,464				—				4,008				24,315
Rental related services			13,674				4,311				745				—				6,096				24,826
Other			14,150				1,809				5,826				—				2,639				24,424
Total direct costs of rental operations			34,943				6,844				19,035				—				12,743				73,565
Costs of sales			23,625				663				3,309				6,107				472				34,176
Total costs of revenues			58,568				7,507				22,344				6,107				13,215				107,741
Gross Profit
Rental			33,961				14,927				13,095				—				12,081				74,064
Rental related services			6,839				80				38				—				2,337				9,294
Rental operations			40,800				15,007				13,133				—				14,418				83,358
Sales			11,298				280				5,417				1,518				226				18,739
Other			337				60				525				—				123				1,045
Total gross profit			52,436				15,346				19,075				1,518				14,767				103,142
Selling and administrative expenses			(24,317	)			(6,672	)			(7,315	)			(1,242	)			(7,786	)			(47,332	)
Other income			—				—				—				—				—				—
Income from operations		$	28,119			$	8,674			$	11,760			$	276			$	6,981				55,810
Interest expense																							(5,170	)
Foreign currency exchange gain																							26
Provision for income taxes																							(11,025	)
Net income																						$	39,641
Other Information
Adjusted EBITDA 1		$	42,528			$	10,617			$	25,333			$	351			$	12,140			$	90,969
Average rental equipment 2		$	863,088			$	181,633			$	395,789
Average monthly total yield 3			2.13	%			3.20	%			2.63	%
Average utilization 4			80.5	%			84.9	%			63.0	%
Average monthly rental rate 5			2.65	%			3.77	%			4.20	%

1.		Adjusted EBITDA is defined as net income before interest expense, provision for income taxes, depreciation, amortization, non-cash impairment costs, share-based compensation and transaction costs.
2.		Average rental equipment represents the cost of rental equipment, excluding new equipment inventory and accessory equipment.
3.		Average monthly total yield is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment for the period.
4.		Average utilization is calculated by dividing the average month end costs of rental equipment on rent by the average month end total costs of rental equipment.
5.		Average monthly rental rate is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment on rent for the period.

MCGRATH RENTCORP
BUSINESS SEGMENT DATA (unaudited)
Twelve months ended December 31, 2023
(dollar amounts in thousands)		Mobile Modular				Portable Storage				TRS- RenTelco				Enviroplex				Adler Tanks (Discontinued)				Consolidated
Revenues
Rental		$	285,553			$	74,536			$	114,247			$	—			$	6,520			$	480,856
Rental related services			114,511				20,510				3,139				—				2,584				140,744
Rental operations			400,064				95,046				117,386				—				9,104				621,600
Sales			155,267				4,587				27,119				20,192				269				207,434
Other			6,905				1,504				3,772				—				65				19,025
Total revenues			562,236				101,137				148,277				20,192				9,438				841,280
Costs and Expenses
Direct costs of rental operations:
Depreciation			36,921				3,514				48,477				—				1,325				90,237
Rental related services			75,390				18,568				2,670				—				2,020				98,648
Other			86,983				7,317				20,642				—				1,270				116,212
Total direct costs of rental operations			199,294				29,399				71,789				—				4,614				305,096
Costs of sales			105,021				2,858				13,884				15,964				159				137,886
Total costs of revenues			304,315				32,257				85,673				15,964				4,773				442,982
Gross Profit
Rental			161,649				63,705				45,128				—				3,926				274,408
Rental related services			39,121				1,942				469				—				564				42,096
Rental operations			200,770				65,647				45,597				—				4,490				316,504
Sales			50,246				1,729				13,235				4,228				110				69,548
Other			6,905				1,504				3,772				—				65				12,246
Total gross profit			257,921				68,880				62,604				4,228				4,665				398,298
Selling and administrative expenses			(138,574	)			(31,537	)			(30,962	)			(6,466	)			(2,582	)			(210,121	)
Other income			2,329				457				832				—				—				3,618
Income (loss) from operations		$	121,676			$	37,800			$	32,474			$	(2,238	)		$	2,083			$	191,795
Interest expense																							(40,934	)
Foreign currency exchange loss																							310
Provision for income taxes																							(38,063	)
Net income																						$	113,108
Other Information
Adjusted EBITDA 1		$	191,990			$	47,147			$	84,736			$	(1,899	)		$	3,682			$	325,656
Average rental equipment 2		$	1,093,086			$	206,095			$	388,679
Average monthly total yield 3			2.18	%			3.01	%			2.43	%
Average utilization 4			79.7	%			77.3	%			58.9	%
Average monthly rental rate 5			2.73	%			3.90	%			4.16	%

1.		Adjusted EBITDA is defined as net income before interest expense, provision for income taxes, depreciation, amortization, non-cash impairment costs, share-based compensation and transaction costs. Adjusted EBITDA for the year ended December 31, 2023, excludes the gain on sale of discontinued operations from the divestiture of Adler Tanks.
2.		Average rental equipment represents the cost of rental equipment, excluding new equipment inventory and accessory equipment.
3.		Average monthly total yield is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment for the period.
4.		Average utilization is calculated by dividing the average month end costs of rental equipment on rent by the average month end total costs of rental equipment.
5.		Average monthly rental rate is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment on rent for the period.

MCGRATH RENTCORP
BUSINESS SEGMENT DATA (unaudited)
Twelve months ended December 31, 2022
(dollar amounts in thousands)		Mobile Modular				Portable Storage				TRS- RenTelco				Enviroplex				Adler Tanks (Discontinued)				Consolidated
Revenues
Rental		$	206,070			$	62,218			$	121,375			$	—			$	66,366			$	456,029
Rental related services			74,756				17,095				3,112				—				27,654				122,617
Rental operations			280,826				79,313				124,487				—				94,020				578,646
Sales			97,046				2,933				24,571				23,170				2,933				150,653
Other			1,339				260				1,720				—				1,205				4,524
Total revenues			379,211				82,506				150,778				23,170				98,158				733,823
Costs and Expenses
Direct costs of rental operations:
Depreciation			28,373				2,799				49,253				—				16,004				96,429
Rental related services			49,910				16,344				2,592				—				20,947				89,793
Other			76,819				6,212				21,327				—				12,422				116,780
Total direct costs of rental operations			155,102				25,355				73,172				—				49,373				303,002
Costs of sales			62,224				1,849				9,707				18,048				2,085				93,913
Total costs of revenues			217,326				27,204				82,879				18,048				51,458				396,915
Gross Profit
Rental			100,878				53,207				50,795				—				37,940				242,820
Rental related services			24,847				750				520				—				6,707				32,824
Rental operations			125,725				53,957				51,315				—				44,647				275,644
Sales			34,822				1,084				14,864				5,122				848				56,740
Other			1,339				260				1,720				—				1,205				4,524
Total gross profit			161,885				55,302				67,899				5,122				46,700				336,908
Selling and administrative expenses			(85,769	)			(24,465	)			(27,245	)			(5,435	)			(28,428	)			(171,342	)
Other income			—				—				—				—				—				—
Income (loss) from operations		$	76,116			$	30,837			$	40,654			$	(313	)		$	18,272			$	165,566
Interest expense																							(15,168	)
Foreign currency exchange loss																							(378	)
Provision for income taxes																							(34,882	)
Net income																						$	115,138
Other Information
Adjusted EBITDA 1		$	121,831			$	37,393			$	92,007			$	(25	)		$	37,660			$	288,866
Average rental equipment 2		$	855,640			$	169,997			$	383,235
Average monthly total yield 3			2.01	%			3.05	%			2.63	%
Average utilization 4			78.0	%			84.8	%			64.2	%
Average monthly rental rate 5			2.57	%			3.60	%			4.11	%

1.		Adjusted EBITDA is defined as net income before interest expense, provision for income taxes, depreciation, amortization, non-cash impairment costs, share-based compensation and transaction costs.
2.		Average rental equipment represents the cost of rental equipment, excluding new equipment inventory and accessory equipment.
3.		Average monthly total yield is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment for the period.
4.		Average utilization is calculated by dividing the average month end costs of rental equipment on rent by the average month end total costs of rental equipment.
5.		Average monthly rental rate is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment on rent for the period.

Reconciliation of Adjusted EBITDA to the most directly comparable GAAP measures

To supplement the Company’s financial data presented on a basis consistent with accounting principles generally accepted in the United States of America (“GAAP”), the Company presents “Adjusted EBITDA”, which is defined by the Company as net income before interest expense, provision for income taxes, depreciation, amortization, share-based compensation and transaction costs. The Company presents Adjusted EBITDA as a financial measure as management believes it provides useful information to investors regarding the Company’s liquidity and financial condition and because management, as well as the Company’s lenders, use this measure in evaluating the performance of the Company.

Management uses Adjusted EBITDA as a supplement to GAAP measures to further evaluate the Company’s period-to-period operating performance, compliance with financial covenants in the Company’s revolving lines of credit and senior notes and the Company’s ability to meet future capital expenditure and working capital requirements. Management believes the exclusion of non-cash charges, including share-based compensation and transaction costs, 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 and transaction costs. The Company believes that Adjusted EBITDA is of limited use in that it does not reflect all of the amounts associated with the Company’s results of operations as determined in accordance with GAAP and does not accurately reflect real cash flow. In addition, other companies may not use Adjusted EBITDA or may use other non-GAAP measures, limiting the usefulness of Adjusted EBITDA for purposes of comparison. The Company’s presentation of Adjusted EBITDA should not be construed as an inference that the Company will not incur expenses that are the same as or similar to the adjustments in this presentation. Therefore, Adjusted EBITDA should only be used to evaluate the Company’s results of operations in conjunction with the corresponding GAAP measures. The Company compensates for the limitations of Adjusted EBITDA by relying upon GAAP results to gain a complete picture of the Company’s performance. Because Adjusted EBITDA is a non-GAAP financial measure as defined by the SEC, the Company includes in the tables below reconciliations of Adjusted EBITDA to the most directly comparable financial measures calculated and presented in accordance with GAAP.

Reconciliation of Income from Continuing Operations to Adjusted EBITDA
(dollar amounts in thousands)	Three Months Ended December 31,								Twelve Months Ended December 31,
	2023				2022				2023				2022
Income from continuing operations	$	32,016			$	34,992			$	111,852			$	103,309
Provision for income taxes from continuing operations		11,676				9,690				37,610				31,377
Interest expense		12,126				4,173				40,560				12,230
Depreciation and amortization		27,533				23,508				107,918				93,490
EBITDA		83,351				72,363				297,940				240,406
Share-based compensation		3,002				2,503				8,157				6,747
Transaction costs 3		1,575				3,886				15,877				4,053
Adjusted EBITDA 1	$	87,928			$	78,752			$	321,974			$	251,206
Adjusted EBITDA margin 2		40	%			43	%			39	%			40	%

Reconciliation of Adjusted EBITDA to Net Cash Provided by Operating Activities
(dollar amounts in thousands)	Three Months Ended December 31,								Twelve Months Ended December 31,
	2023				2022				2023				2022
Adjusted EBITDA 1	$	87,928			$	90,969			$	325,656			$	288,866
Interest paid		(10,785	)			(5,793	)			(38,603	)			(14,775	)
Income taxes paid, net of refunds received		(82,018	)			(2,477	)			(91,565	)			(27,362	)
Gain on sale of used rental equipment		(8,678	)			(11,274	)			(31,642	)			(37,979	)
Foreign currency exchange loss		(144	)			(26	)			(310	)			378
Amortization of debt issuance costs		2				3				8				16
Change in certain assets and liabilities:
Accounts receivable, net		(9,204	)			(64	)			(35,143	)			(30,524	)
Prepaid expenses and other assets		(21,936	)			829				(29,326	)			(16,484	)
Accounts payable and other liabilities		15,089				(1,335	)			(17,826	)			8,595
Deferred income		6,186				(9,698	)			14,094				23,701
Net cash (used in) provided by operating activities	$	(23,560	)		$	61,134			$	95,343			$	194,432

1.		Adjusted EBITDA is defined as net income before interest expense, provision for income taxes, depreciation, amortization, non-cash impairment costs, share-based compensation and transaction costs. Adjusted EBITDA for the twelve months ended December 31, 2023, excludes the gain on sale of discontinued operations from the divestiture of Adler Tanks. Total Adjusted EBITDA attributed to discontinued operations for the years ended December 31, 2023 and 2022, was $3,682 and $37,660, respectively.
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.

 

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The Mc Grath Rent Stock at the time of publication of the news with a fall of -1,31 % to 127,0EUR on Nasdaq stock exchange (21. Februar 2024, 21:50 Uhr).