McGrath RentCorp Announces Results for Third Quarter 2012

  McGrath RentCorp Announces Results for Third Quarter 2012

                         Rental revenues increase 4%

                  EPS decreases 19% to $0.50 for the Quarter

Business Wire

LIVERMORE, Calif. -- November 01, 2012

McGrath RentCorp (NASDAQ: MGRC) (the “Company”), a diversified business to
business rental company, today announced revenues for the quarter ended
September 30, 2012 of $99.4 million, a decrease of 5%, compared to $104.9
million in the third quarter of 2011. The Company reported net income of $12.5
million, or $0.50 per diluted share for the third quarter of 2012, compared to
net income of $15.4 million, or $0.62 per diluted share, in the third quarter
of 2011.

Dennis Kakures, President and CEO of McGrath RentCorp, made the following
comments regarding these results and future expectations:

“Although Company-wide rental revenues increased 4% from a year ago, we had a
19% drop in EPS for the quarter. The reduction of $0.12 of EPS was primarily
related to Enviroplex, our non-core California classroom manufacturing
business having lower equipment sales of approximately $9.3 million, and to a
lesser degree, margin compression during the quarter from a year ago. These
items accounted for approximately $0.08 of the EPS reduction. The sales
revenue shortfall was chiefly related to projects that will bill either later
in 2012, or in early 2013. The margin compression reduction in Enviroplex
profitability resulted from cost overruns on multiple custom projects moving
through the plant during the same time frame. Additionally, as a result of the
in-plant bottleneck, and needing to meet our delivery commitment time frames,
a considerable amount of work was completed on site. This site work was
considerably more costly due to significant inefficiencies between in-plant
and field production work, and prevailing wage labor rates. Looking forward,
we anticipate continued margin compression on Enviroplex’s sales revenues over
the next quarter or two as these projects are completed. The remaining EPS
reduction of $0.04 from a year ago was due to higher depreciation expense on a
larger sized, but lower utilized fleet and higher interregional transportation
costs to move equipment primarily from Northeastern to Southern U.S. rental
markets for Adler, lower equipment sales and related gross profit in our
modular division, partially offset by higher profitability at TRS-RenTelco.

TRS-RenTelco, our electronic test equipment division, rental revenues for the
quarter increased by $1.8 million, or 7% to $26.5 million from a year ago.
Divisional income from operations increased by 24% from the third quarter of
2011 to $10.2 million. The significantly higher percentage increase in
profitability as compared to rental revenues was primarily related to lower
direct SG&A and equipment depreciation expenses, partially offset by higher
laboratory costs, all as a percentage of rental revenues from a year ago. Our
results for TRS-RenTelco continue to reflect its discipline in strategic
focus, strong brand following, operational efficiencies and an exceptionally
talented and tenured work force.

Adler Tank Rentals, our tank and box division, rental revenues increased by
$0.8 million, or 5% to $16.9 million from a year ago. Divisional income from
operations decreased by $1.9 million or 20% year over year to $7.6 million.
The decrease in profitability was primarily due to lower utilization driving
higher rental equipment depreciation as a percentage of rental revenues, and
higher inventory center costs from a year ago. As a result of the ongoing
reduction in dry natural gas production in the Northeast and markedly lower
utilization of Adler’s 21,000 gallon tank fleet in the region, we moved a
large number of units to other regions, primarily to fill order opportunities.
The one-time costs to transport these tanks were a material portion of the
increase in inventory center expenses compared to a year ago.

The higher depreciation expense as a percentage of rental revenues was the
result of a significant increase in year over year rental equipment inventory
to support a larger geographic footprint and new customer growth
opportunities, and lower equipment utilization levels, primarily in the
Northeast, from a year ago. Division-wide Adler rental equipment utilization
declined to 69.4% at the end of the third quarter compared to 90.5% a year
ago; however, utilization increased from 67.5% from the end of the second
quarter 2012. We are building the Adler brand across the continental U.S. and
it is essential that we have the right mix and depth of inventory on the
ground in all of the markets in which we operate in order to respond to a
variety of end market needs. In fact, Adler’s industry mix of rental revenues
for the third quarter of 2012 compared to the same period in 2011 reflects
fracking related rentals decreasing from approximately 35% to 19%, while
overall rental revenues increased 5%.

Modular division rental revenues for the quarter were down slightly to $20.0
million, or less than 1% from a year ago, however, rental revenues increased
from $19.5 million or 2% from the second quarter of 2012. Rental revenues for
the quarter grew by 9% year over year in our markets outside of California;
however, they declined by 7% within the state. We had a 22% increase in first
month’s rent bookings for modular buildings during the third quarter compared
to a year ago with our markets outside of California increasing by 48%, while
the California market was flat. Although the California market still has
general economic and state budget headwinds, we believe there is a discernible
recovery occurring in the state. The unemployment rate has declined to 10.2%
from 10.7% in July, and from a Great Recession high of 12.6%. The housing
market for new homes in the greater Bay Area has improved with a number of
projects under construction and others in preliminary stages. There has also
been an uptick in commercial construction activity. We are hopeful these
trends continue and that we begin to see their impact in our California
modular numbers.

Modular division year over year income from operations decreased by 24% to
$4.6 million; however, modular rental operations gross profit declined only
4%. The higher percentage reduction in income from operations was due
primarily to lower gross profit on modular equipment sales, which tends to be
less predictable than for rentals. We also experienced higher inventory center
equipment processing expenses for the quarter from a year ago related
primarily to increased business activity in the Texas market. Finally, modular
division utilization was down slightly to 66% from 67% a year ago, and was
flat compared to the second quarter of 2012. It is important to point out that
our division-wide modular quarterly average utilization over the past eight
quarters has stayed within a narrow range of 66% to 68%. We believe this
speaks to a modular business that has stabilized with greater upside
opportunity than downside risk.

Looking forward, we are keenly focused on leveraging the significant
opportunities that Adler Tank Rentals provides us in building a much larger
and more profitable tank and box rental business. Although third quarter
utilization levels were lower than we would like to see them, there is no
reservation in my outlook that we are in the very early innings of a very
successful franchise. Our growth opportunities are numerous and we will need
many more rental assets over time in achieving our goals.

As for other strategic direction comments, our portable storage business
continued to make good progress during the quarter in building its customer
following, increasing booking levels and growing rental revenues. We are
beginning to realize critical mass in our installed base of customers in some
of the markets in which we operate. We still have ample room to grow rental
revenues within our current cost structure. At the same time, we are actively
investigating additional geographies for expansion. I’m very pleased with what
we have accomplished in growing our portable storage business starting in
2008, and in an economy that has had an average annual real GDP growth rate of
less than one-half of one-percent over this time frame. As the economy
continues to improve, and with the infrastructure and quality team we are
continuing to build, our portable storage business should benefit very
favorably. We believe that we have an excellent opportunity to become a
meaningful player in the portable storage rental industry. As mentioned this
past quarter, we plan to exit the environmental test equipment business. We
have had interest from multiple parties in acquiring the assets of the
business and are presently managing this process. We’ve also recently added a
full-time corporate development associate to our team in order to provide
greater bandwidth in our review of a continuum of strategic growth
opportunities.”

All comparisons presented below are for the quarter ended September 30, 2012
to the quarter ended September 30, 2011 unless otherwise indicated.

MOBILE MODULAR

For the third quarter of 2012, the Company’s Mobile Modular division reported
a 24% decrease in income from operations to $4.6 million. Rental revenues
decreased 1% to $20.0 million and other direct costs increased 14% to $6.7
million, which resulted in a decrease in gross profit on rental revenues of 9%
to $9.8 million. Sales revenues decreased 33% to $5.7 million, with gross
profit on sales revenues decreasing 41% to $1.3 million, primarily due to
lower margins on used equipment sales revenues in the third quarter of 2012.
Selling and administrative expenses increased 1% to $8.5 million primarily as
a result of higher salary and benefit costs, primarily related to the
expansion of our Portable Storage growth initiative.

TRS-RENTELCO

For the third quarter of 2012, the Company’s TRS-RenTelco division reported a
24% increase in income from operations to $10.2 million. Rental revenues
increased 7% to $26.5 million. The increase in rental revenues together with a
1% decrease in depreciation expense to $9.7 million and an 18% increase in
other direct costs to $3.9 million, resulted in an increase in gross profit on
rental revenues of 10% to $12.9 million. Sales revenues increased 2% to $5.8
million with gross profit on sales increasing 11% to $2.8 million, due to
higher margins on used equipment sales revenues in the third quarter of 2012.
Selling and administrative expenses decreased 1% to $6.2 million, primarily
due to decreased salary and benefit costs.

ADLER TANKS

For the third quarter of 2012, the Company’s Adler Tanks division reported a
20% decrease in income from operations to $7.6 million. Rental revenues
increased 5% to $16.9 million and other direct costs increased 94% to $2.1
million, which resulted in a decrease in gross profit on rental revenues of 8%
to $11.8 million. Rental related services revenues increased $1.3 million to
$4.6 million, with gross profit on rental related services revenues decreasing
$0.3 million to $0.7 million. Selling and administrative expenses increased
13% to $4.9 million, primarily due to higher allocated corporate expenses as
Adler’s revenues grew at a higher rate compared to other business segments and
increased personnel and benefit costs.

OTHER HIGHLIGHTS

  *Debt increased $6.2 million during the quarter to $314.2 million, with the
    Company’s funded debt (notes payable) to equity ratio decreasing from 0.89
    to 1 at June 30, 2012 to 0.88 to 1 at September 30, 2012. As of September
    30, 2012, the Company had capacity to borrow an additional $215.8 million
    under its lines of credit.
  *Dividend rate increased 2% to $0.235 per share for the third quarter 2012
    compared to the third quarter 2011. On an annualized basis, this dividend
    represents a 3.6% yield on the October 31, 2012 close price of $26.26.
  *Adjusted EBITDA decreased 8% to $42.2 million for the third quarter of
    2012. At September 30, 2012, the Company’s ratio of funded debt to the
    last twelve months actual Adjusted EBITDA was 1.96 to 1 compared to 1.88
    to 1 at June 30, 2012. Adjusted EBITDA is defined as net income before
    interest expense, provision for income taxes, depreciation, amortization
    and non-cash stock-based compensation. A reconciliation of net income to
    Adjusted EBITDA and Adjusted EBITDA to net cash provided by operating
    activities can be found at the end of this release.

You should read this press release in conjunction with the financial
statements and notes thereto included in the Company’s latest Forms 10-K and
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 and 10-Q and other SEC filings.

FINANCIAL GUIDANCE

The Company revises its previous 2012 full-year earnings guidance range of
$1.70 to $1.85 to an updated range of $1.70 to $1.75 per diluted share.

For the full-year 2012, the Company expects approximately 5% to 6% growth in
rental operations revenues over 2011 and gross profit from sales to be
approximately 25% to 30% lower than 2011. Rental equipment depreciation
expense is expected to increase to approximately $63 million, driven by rental
fleet growth. Selling and administrative costs are expected to increase to
approximately $84 million to support business growth, and continued investment
in Adler Tanks and our portable storage initiative. Full year interest expense
is forecasted to be approximately $9 million. The Company expects the 2012
effective tax rate to be 39.2% and the diluted share count to be approximately
25.2 million shares. These forward-looking statements reflect McGrath
RentCorp’s expectations as of November 1, 2012. Actual 2012 full-year earnings
per share results may be materially different and affected by many factors,
including those factors outlined in the “forward-looking statements” paragraph
at the end of this press release.

ABOUT MCGRATH RENTCORP

Founded in 1979, McGrath RentCorp is a diversified business-to-business rental
company. Under the trade name Mobile Modular Management Corporation (Mobile
Modular), it rents and sells modular buildings to fulfill customers’ temporary
and permanent classroom and office space needs in California, Texas, Florida,
and the Mid-Atlantic from Washington D.C. to Georgia. The Company’s
TRS-RenTelco division rents and sells electronic test equipment and is one of
the leading rental providers of general purpose and communications test
equipment in the Americas. In 2008, the Company purchased the assets of Adler
Tank Rentals, a New Jersey based supplier of rental containment solutions for
hazardous and nonhazardous liquids and solids with operations today serving
key markets throughout the U.S. Also, in 2008, under the trade name
TRS-Environmental, the Company entered the environmental test equipment rental
business serving the Americas. In 2008, the Company also entered the portable
storage container rental business in California under the trade name Mobile
Modular Portable Storage, and in 2009 expanded this business into Texas and
Florida. For more information on McGrath RentCorp and its operating units,
please visit our websites:

Corporate – www.mgrc.com
Tanks and Boxes – www.AdlerTankRentals.com
Modular Buildings – www.MobileModularRents.com
Portable Storage – www.MobileModularRents-PortableStorage.com
Electronic Test Equipment – www.TRS-RenTelco.com
Environmental Test Equipment – www.TRS-Environmental.com
School Facilities Manufacturing – www.Enviroplex.com

CONFERENCE CALL NOTE

As previously announced in its press release of October 11, 2012, McGrath
RentCorp will host a conference call at 5:00 p.m. Eastern Time (2:00 p.m.
Pacific Time) on November 1, 2012 to discuss the third quarter 2012 results.
To participate in the teleconference, dial 1-877-941-1427 (in the U.S.), or
1-480-629-9664 (outside the US), or visit the investor relations section of
the Company’s website at www.mgrc.com. Telephone replay of the call will be
available for 7 days following the call by dialing 1-800-406-7325 (in the
U.S.), or 1-303-590-3030 (outside the U.S.). The pass code for the call replay
is 4568266.

FORWARD-LOOKING STATEMENTS

Statements in this press release which are not historical facts are
forward-looking statements within the meaning of Section 21E of the Securities
Exchange Act of 1934. All statements, other than statements of historical
facts, regarding McGrath RentCorp’s business strategy, future operations,
financial position, estimated revenues or losses, projected costs, prospects,
plans and objectives are forward looking statements. These forward-looking
statements appear in a number of places and can be identified by the use of
forward-looking terminology such as “may,” “will,” “should,” “expect,” “plan,”
“anticipate,” “believe,” “estimate,” “predict,” “future,” “intend,” “hopes,”
“goals” or “certain” or the negative of these terms or other variations or
comparable terminology. In particular, the statements made in this press
release about the following topics are forward looking statements: margin
compression on Enviroplex’s sales revenues over the next quarter or two, Adler
Tanks brand initiatives and expectations about building a larger and more
profitable tank and box rental business, recovery in the California economy in
general and the impact of this recovery on the modular market within the
state, stabilization of our modular business with greater upside opportunity
than downside risk, our plans to exit the environmental test equipment
business [and management of the sale of these assets], and the statements
under the heading “Financial Guidance.”

Management cautions that forward-looking statements are not guarantees of
future performance and are subject to risks and uncertainties that could cause
our actual results to differ materially from those projected in such
forward-looking statements including, without limitation, the following: the
continuation of the current recession and financial, budget and credit crises,
particularly in California, including the impact on funding for school
facility projects and residential and commercial construction sectors, our
customers’ need and ability to rent our products, and the Company’s ability to
access additional capital in the current uncertain capital and credit market;
changes in state funding for education and the timing and impact of federal
stimulus monies; the effectiveness of management’s strategies and decisions,
general economic, stock market and business conditions, including in the
states and countries where we sell or rent our products; continuing demand for
our products; hiring, retention and motivation of key personnel; failure by
third parties to manufacture and deliver our products in a timely manner and
to our specifications; the cost of and our ability to successfully implement
information system upgrades; our ability to finance expansion and to locate
and consummate acquisitions and to successfully integrate and operate Adler
Tanks and other acquisitions; fluctuations in interest rates and the Company’s
ability to manage credit risk; our ability to effectively manage our rental
assets; the risk that we may be subject to litigation under environmental,
health and safety and product liability laws and claims from employees,
vendors and other third parties; fluctuations in the Company’s effective tax
rate; changes in financial accounting standards; our failure to comply with
internal control requirements; catastrophic loss to our facilities; effect on
the Company’s Adler Tanks business from reductions to the price of oil or gas;
new or modified statutory or regulatory requirements; success of the Company’s
strategic growth initiatives; risks associated with doing business with
government entities; seasonality of our businesses; intense industry
competition including increasing price pressure; our ability to timely
deliver, install and redeploy our rental products; significant increases in
raw materials, labor, and other costs; and risks associated with operating
internationally, including unfavorable exchange rates for the U.S. dollar
against our Canadian dollar denominated revenues.

Our future business, financial condition and results of operations could
differ materially from those anticipated by such forward-looking statements
and are subject to risks and uncertainties including the risks set forth
above, those discussed in Part II—Item 1A “Risk Factors” and elsewhere in our
Form 10-Q for the quarter ended September 30, 2012 filed with the SEC on
November 1, 2012 and in our Form 10-K for the year ended December 31, 2011,
filed with the SEC on February 29, 2012, and those that may be identified from
time to time in our reports and registration statements filed with the SEC.
Forward-looking statements are made only as of the date of this press release
and are based on management’s reasonable assumptions; however, these
assumptions can be wrong or affected by known or unknown risks and
uncertainties. Readers should not place undue reliance on these
forward-looking statements and are cautioned that any such forward-looking
statements are not guarantees of future performance. Except as otherwise
required by law, we do not undertake any duty to update any of the
forward-looking statements after the date of this press release to conform
such statements to actual results or to changes in our expectations.

MCGRATH RENTCORP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)
                                                     
                                 Three Months Ended    Nine Months Ended
                                  September 30,          September 30,
(in thousands, except per share   2012     2011      2012      2011
amounts)
                                                                  
REVENUES
Rental                            $ 63,418   $ 60,964    $ 183,327   $ 172,108
Rental Related Services            13,010    10,737     34,703     28,616
Rental Operations                   76,428     71,701      218,030     200,724
Sales                               22,382     32,783      42,318      55,206
Other                              620       388        1,776      1,488
Total Revenues                     99,430    104,872    262,124    257,418
                                                                     
COSTS AND EXPENSES
Direct Costs of Rental
Operations
Depreciation of Rental              16,163     15,357      47,236      44,794
Equipment
Rental Related Services             10,252     8,321       27,816      22,201
Other                              12,698    10,274     33,856     30,479
Total Direct Costs of Rental        39,113     33,952      108,908     97,474
Operations
Costs of Sales                     16,677    23,622     28,961     37,392
Total Costs of Revenues            55,790    57,574     137,869    134,866
Gross Profit                        43,640     47,298      124,255     122,552
Selling and Administrative         20,848    19,992     63,372     57,238
Expenses
Income from Operations              22,792     27,306      60,883      65,314
Interest Expense                   2,312     2,051      6,867      5,487
Income Before Provision for         20,480     25,255      54,016      59,827
Income Taxes
Provision for Income Taxes         8,029     9,900      21,175     23,452
Net Income                        $ 12,451   $ 15,355    $ 32,841    $ 36,375
                                                                     
Earnings Per Share:
Basic                             $ 0.50     $ 0.63      $ 1.33      $ 1.50
Diluted                           $ 0.50     $ 0.62      $ 1.31      $ 1.47
Shares Used in Per Share
Calculation:
Basic                               24,785     24,362      24,730      24,320
Diluted                             25,106     24,719      25,133      24,702
                                                                     
Cash Dividends Declared Per       $ 0.235    $ 0.230     $ 0.705     $ 0.690
Share
                                                           

MCGRATH RENTCORP
CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)
                                                 September 30,  December 31,
(in thousands)                                    2012         2011     
                                                                  
ASSETS
Cash                                              $ 362           $ 1,229
Accounts Receivable, net of allowance for
doubtful accounts of $2,200 in 2012 and $1,500      101,048         92,671
in 2011
                                                                  
Rental Equipment, at cost:
Relocatable Modular Buildings                       549,225         539,147
Electronic Test Equipment                           274,300         258,586
Liquid and Solid Containment Tanks and Boxes       246,228       201,456  
                                                    1,069,753       999,189
Less Accumulated Depreciation                      (350,117  )    (326,043 )
Rental Equipment, net                              719,636       673,146  
                                                                  
Property, Plant and Equipment, net                  99,916          94,702
Prepaid Expenses and Other Assets                   27,899          17,170
Intangible Assets, net                              11,693          12,311
Goodwill                                           27,700        27,700   
Total Assets                                      $ 988,254      $ 918,929  
                                                                  
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Notes Payable                                     $ 314,193       $ 296,500
Accounts Payable and Accrued Liabilities            61,615          58,854
Deferred Income                                     35,642          25,067
Deferred Income Taxes, net                         221,046       205,366  
Total Liabilities                                  632,496       585,787  
                                                                  
Shareholders’ Equity:
Common Stock, no par value -
Authorized -- 40,000 shares
Issued and Outstanding -- 24,809 shares in 2012     82,449          74,878
and 24,576 shares in 2011
Retained Earnings                                  273,309       258,264  
Total Shareholders’ Equity                         355,758       333,142  
Total Liabilities and Shareholders’ Equity        $ 988,254      $ 918,929  
                                                                     

MCGRATH RENTCORP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)
                                              Nine Months Ended September 30,
(in thousands)                                  2012           2011     
                                                               
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income                                     $  32,841          $ 36,375
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Depreciation and Amortization                     53,665            49,746
Provision for Doubtful Accounts                   1,775             1,373
Non-Cash Stock-Based Compensation                 3,154             3,709
Gain on Sale of Used Rental Equipment             (9,381    )       (9,713   )
Change In:
Accounts Receivable                               (10,152   )       (14,526  )
Income Taxes Receivable                           —                 6,131
Prepaid Expenses and Other Assets                 (10,729   )       (109     )
Accounts Payable and Accrued Liabilities          3,580             10,467
Deferred Income                                   10,575            1,641
Deferred Income Taxes                            15,680          19,401   
Net Cash Provided by Operating Activities        91,008          104,495  
                                                                  
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Rental Equipment                      (106,219  )       (120,699 )
Purchase of Property, Plant and Equipment         (11,025   )       (15,181  )
Proceeds from Sale of Used Rental Equipment      20,556          21,502   
Net Cash Used in Investing Activities            (96,688   )      (114,378 )
                                                                  
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Borrowings (Repayments) Under Bank Lines      17,693            (64,067  )
of Credit
Borrowings Under Private Placement                —                 100,000
Principal Payments on Senior Notes                —                 (12,000  )
Proceeds from the Exercise of Stock Options       3,572             1,848
Excess Tax Benefit from Exercise and              844               408
Disqualifying Disposition of Stock Options
Payment of Dividends                             (17,296   )      (16,644  )
Net Cash Provided by Financing Activities        4,813           9,545    
                                                                  
Net Decrease in Cash                              (867      )       (338     )
Cash Balance, beginning of period                1,229           990      
Cash Balance, end of period                    $  362            $ 652      
                                                                  
Interest Paid, during the period               $  5,854          $ 3,705    
Net Income Taxes Paid (Refunds Received),      $  4,633          $ (2,696   )
during the period
Dividends Accrued During the period, not yet   $  6,156          $ 5,772    
paid
Rental Equipment Acquisitions, not yet paid    $  6,868          $ 5,545    
                                                                     

MCGRATH RENTCORP

BUSINESS SEGMENT DATA (unaudited)

Three Months Ended September 30, 2012


                 Mobile        TRS-          Adler
(dollar         Modular      RenTelco     Tanks        Enviroplex  Consolidated
amounts in
thousands)
Revenues                                                          
Rental           $ 20,001      $ 26,529      $ 16,888      $   —        $   63,418
Rental Related    7,227      1,147      4,636        —          13,010
Services
Rental             27,228        27,676        21,524          —            76,428
Operations
Sales              5,661         5,803         1,735           9,183        22,382
Other             111        447        62           —          620
Total Revenues    33,000     33,926     23,321       9,183      99,430
                                                                        
Costs and
Expenses
Direct Costs
of Rental
Operations:
Depreciation
of Rental          3,478         9,670         3,015           —            16,163
Equipment
Rental Related     5,321         949           3,982           —            10,252
Services
Other             6,679      3,938      2,081        —          12,698
Total Direct
Costs of           15,478        14,557        9,078           —            39,113
Rental
Operations
Costs of Sales    4,368      3,009      1,695        7,605      16,677
Total Costs of    19,846     17,566     10,773       7,605      55,790
Revenue
                                                                        
Gross Profit
Rental             9,844         12,921        11,792          —            34,557
Rental Related    1,906      198        654          —          2,758
Services
Rental             11,750        13,119        12,446          —            37,315
Operations
Sales              1,293         2,794         40              1,578        5,705
Other             111        447        62           —          620
Total Gross        13,154        16,360        12,548          1,578        43,640
Profit
Selling and
Administrative    8,538      6,210      4,938        1,162      20,848
Expenses
Income from      $ 4,616     $ 10,150    $ 7,610     $   416          22,792
Operations
Interest                                                                    2,312
Expense
Provision for                                                              8,029
Income taxes
Net Income                                                              $   12,451
                                                                        
Other
Information
Average Rental   $ 526,534     $ 271,983     $ 231,955
Equipment ^1
Average
Monthly Total      1.26    %     3.25    %     2.43    %
Yield ^2
Average            66.2    %     65.7    %     68.9    %
Utilization ^3
Average
Monthly Rental     1.91    %     4.95    %     3.52    %
Rate ^4


1 Average Rental Equipment represents the cost of rental equipment excluding
accessory equipment. For Mobile Modular and Adler Tanks, Average Rental
Equipment also excludes new equipment inventory.
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 Average Utilization is calculated by dividing the cost of Average Rental
Equipment on rent by the total cost of Average 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.

MCGRATH RENTCORP

BUSINESS SEGMENT DATA (unaudited)

Three Months Ended September 30, 2011


                 Mobile        TRS-          Adler
(dollar         Modular      RenTelco     Tanks        Enviroplex  Consolidated
amounts in
thousands)
Revenues                                                          
Rental           $ 20,123      $ 24,759      $ 16,082      $  —         $   60,964
Rental Related    6,565      871        3,301       —           10,737
Services
Rental             26,688        25,630        19,383         —             71,701
Operations
Sales              8,485         5,699         134            18,465        32,783
Other             109        242        37          —           388
Total Revenues    35,282     31,571     19,554      18,465      104,872
                                                                        
Costs and
Expenses
Direct Costs
of Rental
Operations:
Depreciation
of Rental          3,457         9,725         2,175          —             15,357
Equipment
Rental Related     5,115         856           2,350          —             8,321
Services
Other             5,873      3,327      1,074       —           10,274
Total Direct
Costs of           14,445        13,908        5,599          —             33,952
Rental
Operations
Costs of Sales    6,296      3,192      79          14,055      23,622
Total Costs of    20,741     17,100     5,678       14,055      57,574
Revenues
                                                                        
Gross Profit
Rental             10,793        11,707        12,833         —             35,333
Rental Related    1,450      15         951         —           2,416
Services
Rental             12,243        11,722        13,784         —             37,749
Operations
Sales              2,189         2,507         55             4,410         9,161
Other             109        242        37          —           388
Total Gross        14,541        14,471        13,876         4,410         47,298
Profit
Selling and
Administrative    8,428      6,271      4,387       906         19,992
Expenses
Income from      $ 6,113     $ 8,200     $ 9,489     $  3,504         27,306
Operations
Interest                                                                    2,051
Expense
Provision for                                                              9,900
Income taxes
Net Income                                                              $   15,355
                                                                        
Other
Information
Average Rental   $ 506,130     $ 264,980     $ 164,415
Equipment ^1
Average
Monthly Total      1.33    %     3.11    %     3.26    %
Yield ^2
Average            67.1    %     65.5    %     88.0    %
Utilization ^3
Average
Monthly Rental     1.98    %     4.76    %     3.70    %
Rate ^4


1 Average Rental Equipment represents the cost of rental equipment excluding
accessory equipment. For Mobile Modular and Adler Tanks, Average Rental
Equipment also excludes new equipment inventory.
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 Average Utilization is calculated by dividing the cost of Average Rental
Equipment on rent by the total cost of Average 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.

MCGRATH RENTCORP

BUSINESS SEGMENT DATA (unaudited)

Nine Months Ended September 30, 2012


                 Mobile        TRS-          Adler
(dollar         Modular      RenTelco     Tanks        Enviroplex  Consolidated
amounts in
thousands)
Revenues                                                          
Rental           $ 59,414      $ 74,796      $ 49,117      $ —          $   183,327
Rental Related    19,427     2,831      12,445     —           34,703
Services
Rental             78,841        77,627        61,562        —              218,030
Operations
Sales              9,949         16,092        2,371         13,906         42,318
Other             345        1,309      122        —           1,776
Total Revenues    89,135     95,028     64,055     13,906      262,124
                                                                        
Costs and
Expenses
Direct Costs
of Rental
Operations:
Depreciation
of Rental          10,437        28,280        8,519         —              47,236
Equipment
Rental Related     15,246        2,698         9,872         —              27,816
Services
Other             18,326     10,537     4,993      —           33,856
Total Direct
Costs of           44,009        41,515        23,384        —              108,908
Rental
Operations
Costs of Sales    7,467      8,311      2,119      11,064      28,961
Total Costs of    51,476     49,826     25,503     11,064      137,869
Revenue
                                                                        
Gross Profit
Rental             30,651        35,979        35,605        —              102,235
Rental Related    4,181      133        2,573      —           6,887
Services
Rental             34,832        36,112        38,178        —              109,122
Operations
Sales              2,482         7,781         252           2,842          13,357
Other             345        1,309      122        —           1,776
Total Gross        37,659        45,202        38,552        2,842          124,255
Profit
Selling and
Administrative    25,317     19,315     15,347     3,393       63,372
Expenses
Income (Loss)
from             $ 12,342    $ 25,887    $ 23,205    $ (551   )       60,883
Operations
Interest                                                                    6,867
Expense
Provision for                                                              21,175
Income taxes
Net Income                                                              $   32,841
                                                                        
Other
Information
Average Rental   $ 521,382     $ 266,148     $ 216,985
Equipment ^1
Average
Monthly Total      1.27    %     3.13    %     2.52    %
Yield ^2
Average            66.3    %     65.8    %     72.0    %
Utilization ^3
Average
Monthly Rental     1.91    %     4.76    %     3.49    %
Rate ^4


1 Average Rental Equipment represents the cost of rental equipment excluding
accessory equipment. For Mobile Modular and Adler Tanks, Average Rental
Equipment also excludes new equipment inventory.
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 Average Utilization is calculated by dividing the cost of Average Rental
Equipment on rent by the total cost of Average 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.

MCGRATH RENTCORP

BUSINESS SEGMENT DATA (unaudited)

Nine Months Ended September 30, 2011


                 Mobile        TRS-          Adler
(dollar         Modular      RenTelco     Tanks        Enviroplex  Consolidated
amounts in
thousands)
Revenues                                                          
Rental           $ 59,689      $ 70,370      $ 42,049      $  —         $   172,108
Rental Related    17,886     2,273      8,457       —           28,616
Services
Rental             77,575        72,643        50,506         —             200,724
Operations
Sales              16,521        18,033        237            20,415        55,206
Other             314        1,070      104         —           1,488
Total Revenues    94,410     91,746     50,847      20,415      257,418
                                                                        
Costs and
Expenses
Direct Costs
of Rental
Operations:
Depreciation
of Rental          10,306        28,561        5,927          —             44,794
Equipment
Rental Related     13,788        2,014         6,399          —             22,201
Services
Other             17,263     9,902      3,314       —           30,479
Total Direct
Costs of           41,357        40,477        15,640         —             97,474
Rental
Operations
Costs of Sales    12,083     9,754      154         15,401      37,392
Total Costs of    53,440     50,231     15,794      15,401      134,866
Revenue
                                                                        
Gross Profit
Rental             32,120        31,907        32,808         —             96,835
Rental Related    4,098      259        2,058       —           6,415
Services
Rental             36,218        32,166        34,866         —             103,250
Operations
Sales              4,438         8,279         83             5,014         17,814
Other             314        1,070      104         —           1,488
Total Gross        40,970        41,515        35,053         5,014         122,552
Profit
Selling and
Administrative    24,027     18,920     11,704      2,587       57,238
Expenses
Income from      $ 16,943    $ 22,595    $ 23,349    $  2,427         65,314
Operations
Interest                                                                    5,487
Expense
Provision for                                                              23,452
Income taxes
Net Income                                                              $   36,375
                                                                        
Other
Information
Average Rental   $ 501,323     $ 257,593     $ 148,939
Equipment ^1
Average
Monthly Total      1.32    %     3.04    %     3.14    %
Yield ^2
Average            67.1    %     65.4    %     86.4    %
Utilization ^3
Average
Monthly Rental     1.97    %     4.64    %     3.63    %
Rate ^4


1 Average Rental Equipment represents the cost of rental equipment excluding
accessory equipment. For Mobile Modular and Adler Tanks, Average Rental
Equipment also excludes new equipment inventory.
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 Average Utilization is calculated by dividing the cost of Average Rental
Equipment on rent by the total cost of Average 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.

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, and non-cash stock-based compensation. 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 as well as the Company’s ability to meet future capital expenditure and
working capital requirements. Management believes the exclusion of non-cash
charges, including stock-based compensation, 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 generally accepted accounting principles in the
United States 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 stock-based compensation charges. 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 Securities
and Exchange Commission, 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        Three Months Ended        Nine Months Ended           Twelve Months Ended
amounts in                                                       
thousands)     September 30,             September 30,               September 30,
                2012      2011       2012       2011        2012       2011    
Net Income     $ 12,451     $ 15,355     $ 32,841      $ 36,375      $ 46,068      $ 49,118
Provision
for Income       8,029        9,900        21,175        23,452        29,179        30,975
Taxes
Interest        2,312      2,051      6,867       5,487       8,986       7,026   
Income from      22,792       27,306       60,883        65,314        84,233        87,119
Operations
Depreciation
and              18,326       17,110       53,665        49,746        71,314        66,054
Amortization
Non-Cash
Stock-Based     1,077      1,582      3,154       3,709       4,666       4,781   
Compensation
Adjusted       $ 42,195    $ 45,998    $ 117,702    $ 118,769    $ 160,213    $ 157,954 
EBITDA ^1
                                                                                   
Adjusted
EBITDA           42     %     44     %     45      %     46      %     46      %     47      %
Margin ^2


Reconciliation of Adjusted EBITDA to Net Cash Provided by Operating Activities
(dollar        Three Months Ended          Nine Months Ended           Twelve Months Ended
amounts in                                                         
thousands)     September 30,               September 30,               September 30,
                2012       2011        2012       2011        2012       2011    
Adjusted       $ 42,195      $ 45,998      $ 117,702     $ 118,769     $ 160,213     $ 157,954
EBITDA ^1
Interest         (1,238  )     (1,048  )     (5,854  )     (3,705  )     (9,025  )     (5,481  )
Paid
Net Income
Taxes (Paid)     (1,417  )     (902    )     (4,633  )     2,696         (5,849  )     1,384
Refunds
Received
Gain on Sale
of Used          (3,413  )     (3,217  )     (9,381  )     (9,713  )     (12,112 )     (13,296 )
Rental
Equipment
Change in
certain
assets and
liabilities:
Accounts
Receivable,      (14,646 )     (10,811 )     (8,377  )     (13,153 )     (11,407 )     (730    )
net
Prepaid
Expenses and     (1,240  )     8,712         (10,729 )     (109    )     (13,846 )     1,536
Other Assets
Accounts
Payable and      (1,434  )     (136    )     1,705         8,069         (2,362  )     4,289
Other
Liabilities
Deferred        6,928       (5,550  )    10,575      1,641       10,211      (6,710  )
Income
Net Cash
Provided by    $ 25,735     $ 33,046     $ 91,008     $ 104,495    $ 115,823    $ 138,946 
Operating
Activities


1 Adjusted EBITDA is defined as net income before interest expense, provision
for income taxes, depreciation, amortization and non-cash stock-based
compensation.
2 Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by total
revenues for the period.

Contact:

McGrath RentCorp
Keith E. Pratt, 925-606-9200
Chief Financial Officer
 
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