McGrath RentCorp Announces Results for Fourth Quarter 2012 Rental revenues increase 4% EPS decreases 11% to $0.47 for the Quarter Company announces 2% dividend increase Business Wire LIVERMORE, Calif. -- February 21, 2013 McGrath RentCorp (NASDAQ: MGRC) (the “Company”), a diversified business to business rental company, today announced revenues for the quarter ended December 31, 2012 of $102.0 million, an increase of 20%, compared to $85.2 million in the fourth quarter of 2011. The Company reported net income of $11.9 million, or $0.47 per diluted share for the fourth quarter of 2012, compared to net income of $13.2 million, or $0.53 per diluted share, in the fourth quarter of 2011. Total revenues for the year ended December 31, 2012 were $364.1 million, compared to $342.7 million in 2011. Rental revenues increased 6% to $248.4 million in 2012 compared to $234.9 million in 2011. Net income for the year ended December 31, 2012 decreased 10% to $44.8 million, compared to net income of $49.6 million in the prior year. Diluted earnings per share decreased 11% to $1.78 in 2012 from $2.00 in 2011. The Company also announced that the board of directors declared a quarterly cash dividend of $0.24 per share for the quarter ending March 31, 2013, an increase of 2% over the prior year period. On an annualized basis, the 2013 dividend represents a 3.3% yield, based on the February 20, 2013 closing stock price. The cash dividend will be payable on April 30, 2013 to all shareholders of record on April 16, 2013. Dennis Kakures, President and CEO of McGrath RentCorp, made the following comments regarding these results and future expectations: “Although Company-wide rental revenues increased by 4% from a year ago, we had an 11% decrease in EPS for the quarter. This is primarily the result of lower rental revenues for Adler relative to its current cost structure. While Adler rental revenues grew over last year’s fourth quarter by approximately 6%, its income from operations declined by approximately 39%. Over the past year we have executed on ramping our tank rental business’s national footprint to support higher rental revenue and earnings levels in the years ahead. These costs are primarily related to filling management, sales, office and inventory center positions, facilities and winch / roll-off tractor infrastructure. This is all by design. Adler’s profitability was also impacted negatively during the quarter by $1.3 million higher bad debt write-offs from a year ago. Finally, we also experienced $0.7 million higher expenses during the quarter from a year ago in moving underutilized equipment from the dry gas Marcellus region to other Adler geographies in need of equipment. We have now completed the great majority of these interregional asset movements and we anticipate this expense category will be materially lower in 2013. Adler’s average rental equipment utilization for the fourth quarter 2012 stood at 69.9% compared to 86.8% a year ago, and 68.9% in the third quarter 2012. Our percentage of overall rental revenue derived from E&P gas and oil fracking declined from a high of approximately 35% in 2011, to 15% in the fourth quarter of 2012, and at the same time rental revenues grew by 6%. We have a great tank rental business, but not without some growing pains. What’s most important is that Adler is making very good headway in establishing its brand name, high quality products and exceptional customer experiences over an increasingly larger geography and customer base, quarter after quarter. TRS-RenTelco, our electronic test equipment division, rental revenues for the quarter increased by $1.5 million, or 6% to $26.8 million from a year ago. Divisional income from operations increased by 18% from the fourth quarter of 2011. The significantly higher percentage increase in profitability as compared to rental revenues was chiefly related to lower SG&A, laboratory and equipment depreciation expenses 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. Modular division rental revenues for the quarter were relatively flat at $20.1 million compared to $20.3 million a year ago, and $20.0 million from the third quarter 2012. Rental revenues grew by 9% quarter over quarter in our markets outside of California and declined by 9% within the state. Modular rental revenues outside of California now represent approximately 47% of total modular rental revenues. First month’s rental bookings for the modular division increased 26% from a year ago with bookings outside of California increasing 89% and declining by 15% within the state. Although our California modular results continue to be depressed due to macroeconomic headwinds, there are a number of positive indicators going forward. These bright spots include the successful November 2012 personal income and sales taxes ballot initiative and its anticipated impact on reversing public education austerity; a December 2012 statewide unemployment rate of 9.8% down from a Great Recession high of 12.6%; scarce inventory of existing homes for sale in some regions as market prices begin to increase; and a marked pick-up in both non-residential and residential construction. Modular division quarter over quarter income from operations decreased by approximately 8% to $5.6 million from $6.1 million in 2011; however, modular division gross profit was up slightly to $14.4 million compared to $14.2 million a year ago, and from $13.2 million in the third quarter of 2012. First, the higher percentage reduction in income from operations relative to flat rental revenues for the quarter is primarily due to an increase in bad debt expense, and secondarily to increased SG&A costs in our portable storage business. The increase in gross profit for the fourth quarter over the third quarter 2012 relates chiefly to lower inventory center costs incurred. Finally, average utilization for the fourth quarter 2012 was 66.8%, down slightly from 67.1% a year ago, however, up from 66.2% in the third quarter 2012. Our portable storage business continued to make good progress during the quarter in building its customer following, increasing booking levels and growing rental revenues. The business achieved both its full year rental revenue and profitability goals for 2012. Turning the corner into 2013, our portable storage business has strong momentum and we are excited about its long-term prospects in becoming a meaningfully sized business and a material contributor to McGrath RentCorp’s earnings. In 2012, we added a net $74 million in original cost of rental assets. These rental products were primarily for the growth of Adler Tank Rentals, and for our test equipment and portable storage businesses. During the year we also paid out $23 million in shareholder dividends. Finally, we invested $14 million in property, plant and equipment expenditures, primarily for the growth of Adler Tank Rentals; yet, our year ending notes payable only rose by approximately $5 million, and we carried a 1.91 to 1 ratio of funded debt (notes payable) to last twelve months actual adjusted EBITDA . Strong cash flows and a low-leveraged balance sheet matter greatly towards the financial strength, opportunity nimbleness, and overall shareholder returns of McGrath RentCorp.” All comparisons presented below are for the quarter ended December 31, 2012 to the quarter ended December 31, 2011 unless otherwise indicated. MOBILE MODULAR For the fourth quarter of 2012, the Company’s Mobile Modular division reported an 8% decrease in income from operations to $5.6 million. Rental revenues decreased 1% to $20.1 million and other direct costs increased 16% to $5.4 million, which resulted in a decrease in gross profit on rental revenues of 8% to $11.2 million. Sales revenues increased 12% to $4.1 million, with gross profit on sales revenues increasing 13% to $1.0 million, primarily due to higher new and used equipment sales revenues in the fourth quarter of 2012. Selling and administrative expenses increased 8% to $8.7 million primarily as a result of higher bad debt expense and higher salary and benefit costs, primarily related to the expansion of our Portable Storage growth initiative. TRS-RENTELCO For the fourth quarter of 2012, the Company’s TRS-RenTelco division reported an 18% increase in income from operations to $10.1 million. Rental revenues increased 6% to $26.8 million. The increase in rental revenues together with a 3% decrease in other direct costs to $3.3 million, partly offset by a 4% increase in depreciation expense to $9.9 million, resulted in an increase in gross profit on rental revenues of 10% to $13.7 million. Sales revenues increased 42% to $10.1 million with gross profit on sales flat at $2.8 million, due to lower margins on used equipment sales revenues in the fourth quarter of 2012, which included $3.7 million in proceeds from the sale of the TRS-Environmental product line at a loss of $0.4 million. Selling and administrative expenses decreased 3% to $6.8 million, primarily due to decreased salary and benefit costs. ADLER TANKS For the fourth quarter of 2012, the Company’s Adler Tanks division reported a 39% decrease in income from operations to $5.9 million. Rental revenues increased 6% to $18.2 million and other direct costs more than doubled to $3.0 million, which resulted in a decrease in gross profit on rental revenues of 11% to $11.9 million. Rental related services revenues increased $1.2 million to $5.0 million, with gross profit on rental related services revenues decreasing $0.6 million to $0.6 million. Selling and administrative expenses increased 35% to $6.8 million, primarily due to higher bad debt expenses and higher personnel and benefit costs. OTHER HIGHLIGHTS *Debt decreased $12.2 million during the quarter to $302.0 million, with the Company’s funded debt (notes payable) to equity ratio decreasing from 0.88 to 1 at September 30, 2012 to 0.83 to 1 at December 31, 2012. As of December 31, 2012, the Company had capacity to borrow an additional $228.0 million under its lines of credit. *Dividend rate increased 2% to $0.235 per share for the fourth quarter 2012 compared to the fourth quarter 2011. On an annualized basis, this dividend represents a 3.2% yield on the February 20, 2013 close price of $29.23. *Adjusted EBITDA decreased 4% to $40.6 million for the fourth quarter of 2012. At December 31, 2012, the Company’s ratio of funded debt to the last twelve months actual Adjusted EBITDA was 1.91 to 1 compared to 1.96 to 1 at September 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 expects 2013 full-year earnings per share to be in a range of $1.85 to $1.95 per diluted share. For the full-year 2013, the Company expects 4% to 7% growth in rental operations revenues over 2012. Sales revenue is expected to be approximately 10% lower than 2012, but gross profit from sales is expected to be comparable to 2012. Rental equipment depreciation expense is expected to increase to between $67 and $69 million, driven by rental fleet growth. Selling and administrative costs are expected to increase to between $89 and $91 million to support business growth, and continued investment in Adler Tanks and our portable storage initiative. Full year interest expense is expected to be approximately $9 million. The Company expects the 2013 effective tax rate to be 39.2% and the diluted share count to increase to between 25.3 and 25.7 million shares. These forward-looking statements reflect McGrath RentCorp’s expectations as of February 21, 2013. Actual 2013 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. The Company’s Mobile Modular division 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. The Company’s New Jersey based Adler Tank Rentals subsidiary rents and sells containment solutions for hazardous and nonhazardous liquids and solids with operations today serving key markets throughout the United States. In 2008, the Company 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 School Facilities Manufacturing – www.Enviroplex.com CONFERENCE CALL NOTE As previously announced in its press release of January 24, 2013, McGrath RentCorp will host a conference call at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) on February 21, 2013 to discuss the fourth 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 4584516. 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: higher rental revenues and earnings levels from Adler in the years ahead; lower expenses in 2013 attributable to moving underutilized equipment at Adler; positive indicators in the modular division, such as the successful California personal income and sales tax ballot initiatives, lower unemployment in California, scarce inventory of existing homes, and increases in construction; strong momentum and future growth in our portable storage business, 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-K for the year ended December 31, 2012, which is expected to be filed with the SEC on February 22, 2013, 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 Twelve Months Ended December 31, December 31, (in thousands, except per share 2012 2011 2012 2011 amounts) REVENUES Rental $ 65,117 $ 62,798 $ 248,444 $ 234,906 Rental Related Services 12,217 10,870 46,920 39,486 Rental Operations 77,334 73,668 295,364 274,392 Sales 24,126 11,176 66,444 66,382 Other 490 362 2,266 1,896 Total Revenues 101,950 85,206 364,074 342,670 COSTS AND EXPENSES Direct Costs of Rental Operations Depreciation of Rental 16,583 15,393 63,819 60,187 Equipment Rental Related Services 9,391 8,491 37,207 30,692 Other 11,725 9,380 45,581 39,859 Total Direct Costs of Rental 37,699 33,264 146,607 130,738 Operations Costs of Sales 20,212 7,749 49,173 45,141 Total Costs of Revenues 57,911 41,013 195,780 175,879 Gross Profit 44,039 44,193 168,294 166,791 Selling and Administrative 22,906 20,843 86,278 78,127 Expenses Income from Operations 21,133 23,350 82,016 88,664 Interest Expense 2,282 2,119 9,149 7,606 Income Before Provision for 18,851 21,231 72,867 81,058 Income Taxes Provision for Income Taxes 6,915 8,004 28,090 31,456 Net Income $ 11,936 $ 13,227 $ 44,777 $ 49,602 Earnings Per Share: Basic $ 0.48 $ 0.54 $ 1.80 $ 2.04 Diluted $ 0.47 $ 0.53 $ 1.78 $ 2.00 Shares Used in Per Share Calculation: Basic 24,847 24,431 24,759 24,349 Diluted 25,216 24,892 25,157 24,760 Cash Dividends Declared Per $ 0.235 $ 0.230 $ 0.940 $ 0.920 Share MCGRATH RENTCORP CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) December 31, December 31, (in thousands) 2012 2011 ASSETS Cash $ 1,612 $ 1,229 Accounts Receivable, net of allowance for doubtful accounts of $3,000 in 2012 and $1,500 92,256 92,671 in 2011 Rental Equipment, at cost: Relocatable Modular Buildings 551,101 539,147 Electronic Test Equipment 266,934 258,586 Liquid and Solid Containment Tanks and Boxes 254,810 201,456 1,072,845 999,189 Less Accumulated Depreciation (353,992 ) (326,043 ) Rental Equipment, net 718,853 673,146 Property, Plant and Equipment, net 101,031 94,702 Prepaid Expenses and Other Assets 19,507 17,170 Intangible Assets, net 11,487 12,311 Goodwill 27,700 27,700 Total Assets $ 972,446 $ 918,929 LIABILITIES AND SHAREHOLDERS’ EQUITY Liabilities: Notes Payable $ 302,000 $ 296,500 Accounts Payable and Accrued Liabilities 52,220 58,854 Deferred Income 26,924 25,067 Deferred Income Taxes, net 226,564 205,366 Total Liabilities 607,708 585,787 Shareholders’ Equity: Common Stock, no par value - Authorized - 40,000 shares Issued and Outstanding - 24,931 shares as of December 31, 2012 and 24,576 shares as of 85,342 74,878 December 31, 2011 Retained Earnings 279,396 258,264 Total Shareholders’ Equity 364,738 333,142 Total Liabilities and Shareholders’ Equity $ 972,446 $ 918,929 MCGRATH RENTCORP CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Year Ended December 31, (in thousands) 2012 2011 CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 44,777 $ 49,602 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation and Amortization 72,476 67,395 Provision for Doubtful Accounts 4,263 1,755 Non-Cash Stock-Based Compensation 3,840 5,221 Gain on Sale of Used Rental Equipment (12,389 ) (12,444 ) Change In: Accounts Receivable (3,848 ) (17,938 ) Income Taxes Receivable — 6,131 Prepaid Expenses and Other Assets (2,337 ) (3,226 ) Accounts Payable and Accrued Liabilities (3,456 ) 5,715 Deferred Income 1,857 1,277 Deferred Income Taxes 21,198 25,823 Net Cash Provided by Operating Activities 126,381 129,311 CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of Rental Equipment (131,805 ) (154,963 ) Purchase of Property, Plant and Equipment (14,161 ) (17,204 ) Proceeds from Sale of Used Rental Equipment 30,970 28,453 Net Cash Used in Investing Activities (114,996 ) (143,714 ) CASH FLOWS FROM FINANCING ACTIVITIES: Net Borrowings (Repayments) Under Bank Lines of 5,500 (57,140 ) Credit Borrowings Under Private Placement — 100,000 Principal Payments on Senior Notes — (12,000 ) Proceeds from the Exercise of Stock Options 5,591 5,054 Excess Tax Benefit from Exercise and 1,033 980 Disqualifying Disposition of Stock Options Payment of Dividends (23,126 ) (22,252 ) Net Cash Provided by (Used in) Financing (11,002 ) 14,642 Activities Net Increase in Cash 383 239 Cash Balance, beginning of period 1,229 990 Cash Balance, end of period $ 1,612 $ 1,229 Interest Paid, during the period $ 9,107 $ 6,877 Net Income Taxes Paid (Refunds Received), during $ 5,842 $ (1,480 ) the period Dividends Accrued During the period, not yet $ 6,194 $ 5,952 paid Rental Equipment Acquisitions, not yet paid $ 4,491 $ 8,186 MCGRATH RENTCORP BUSINESS SEGMENT DATA (unaudited) Three Months Ended December 31, 2012 Mobile (dollar Modular TRS-RenTelco Adler Tanks Enviroplex Consolidated amounts in thousands) Revenues Rental $ 20,104 $ 26,849 $ 18,164 $ — $ 65,117 Rental Related 6,348 842 5,027 — 12,217 Services Rental 26,452 27,691 23,191 — 77,334 Operations Sales 4,077 10,100 32 9,917 24,126 Other 103 354 33 — 490 Total Revenues 30,632 38,145 23,256 9,917 101,950 Costs and Expenses Direct Costs of Rental Operations: Depreciation of Rental 3,505 9,894 3,184 — 16,583 Equipment Rental Related 4,246 758 4,387 — 9,391 Services Other 5,409 3,274 3,042 — 11,725 Total Direct Costs of 13,160 13,926 10,613 — 37,699 Rental Operations Costs of Sales 3,109 7,338 38 9,727 20,212 Total Costs of 16,269 21,264 10,651 9,727 57,911 Revenue Gross Profit (Loss) Rental 11,190 13,681 11,938 — 36,809 Rental Related 2,102 84 640 — 2,826 Services Rental 13,292 13,765 12,578 — 39,635 Operations Sales 968 2,762 (6 ) 190 3,914 Other 103 354 33 — 490 Total Gross 14,363 16,881 12,605 190 44,039 Profit Selling and Administrative 8,715 6,753 6,754 684 22,906 Expenses Income (Loss) from $ 5,648 $ 10,128 $ 5,851 $ (494 ) 21,133 Operations Interest 2,282 Expense Provision for 6,915 Income taxes Net Income $ 11,936 Other Information Average Rental $ 532,282 $ 270,505 $ 244,160 Equipment ^1 Average Monthly Total 1.26 % 3.31 % 2.48 % Yield ^2 Average 66.8 % 65.4 % 69.9 % Utilization ^3 Average Monthly Rental 1.88 % 5.06 % 3.54 % Rate ^4 Average Rental Equipment represents the cost of rental equipment excluding 1 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. Average Monthly Rental Rate is calculated by dividing the averages of 4 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, 2011 Mobile (dollar Modular TRS-RenTelco Adler Tanks Enviroplex Consolidated amounts in thousands) Revenues Rental $ 20,280 $ 25,324 $ 17,194 $ — $ 62,798 Rental Related 6,177 860 3,833 — 10,870 Services Rental 26,457 26,184 21,027 — 73,668 Operations Sales 3,631 7,131 41 373 11,176 Other 111 208 43 — 362 Total Revenues 30,199 33,523 21,111 373 85,206 Costs and Expenses Direct Costs of Rental Operations: Depreciation of Rental 3,474 9,478 2,441 — 15,393 Equipment Rental Related 5,047 834 2,610 — 8,491 Services Other 4,677 3,370 1,333 — 9,380 Total Direct Costs of 13,198 13,682 6,384 — 33,264 Rental Operations Costs of Sales 2,778 4,333 161 477 7,749 Total Costs of 15,976 18,015 6,545 477 41,013 Revenues Gross Profit (Loss) Rental 12,129 12,476 13,420 — 38,025 Rental Related 1,130 26 1,223 — 2,379 Services Rental 13,259 12,502 14,643 — 40,404 Operations Sales 853 2,798 (120 ) (104 ) 3,427 Other 111 208 43 — 362 Total Gross 14,223 15,508 14,566 (104 ) 44,193 Profit (Loss) Selling and Administrative 8,104 6,955 4,994 790 20,843 Expenses Income from $ 6,119 $ 8,553 $ 9,572 $ (894 ) 23,350 Operations Interest 2,119 Expense Provision for 8,004 Income taxes Net Income $ 13,227 Other Information Average Rental $ 512,757 $ 264,840 $ 184,365 Equipment ^1 Average Monthly Total 1.32 % 3.19 % 3.11 % Yield ^2 Average 67.1 % 67.7 % 86.8 % Utilization ^3 Average Monthly Rental 1.96 % 4.71 % 3.58 % Rate ^4 Average Rental Equipment represents the cost of rental equipment excluding 1 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. Average Monthly Rental Rate is calculated by dividing the averages of 4 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, 2012 Mobile (dollar Modular TRS-RenTelco Adler Tanks Enviroplex Consolidated amounts in thousands) Revenues Rental $ 79,518 $ 101,645 $ 67,281 $ — $ 248,444 Rental Related 25,775 3,673 17,472 — 46,920 Services Rental 105,293 105,318 84,753 — 295,364 Operations Sales 14,026 26,192 2,403 23,823 66,444 Other 448 1,663 155 — 2,266 Total Revenues 119,767 133,173 87,311 23,823 364,074 Costs and Expenses Direct Costs of Rental Operations: Depreciation of Rental 13,942 38,174 11,703 — 63,819 Equipment Rental Related 19,492 3,456 14,259 — 37,207 Services Other 23,735 13,811 8,035 — 45,581 Total Direct Costs of 57,169 55,441 33,997 — 146,607 Rental Operations Costs of Sales 10,576 15,649 2,157 20,791 49,173 Total Costs of 67,745 71,090 36,154 20,791 195,780 Revenue Gross Profit Rental 41,841 49,660 47,543 — 139,044 Rental Related 6,283 217 3,213 — 9,713 Services Rental 48,124 49,877 50,756 — 148,757 Operations Sales 3,450 10,543 246 3,032 17,271 Other 448 1,663 155 — 2,266 Total Gross 52,022 62,083 51,157 3,032 168,294 Profit Selling and Administrative 34,032 26,068 22,101 4,077 86,278 Expenses Income (Loss) from $ 17,990 $ 36,015 $ 29,056 $ (1,045 ) 82,016 Operations Interest 9,149 Expense Provision for 28,090 Income taxes Net Income $ 44,777 Other Information Average Rental $ 524,084 $ 266,912 $ 223,673 Equipment ^1 Average Monthly Total 1.26 % 3.18 % 2.51 % Yield ^2 Average 66.4 % 65.8 % 71.5 % Utilization ^3 Average Monthly Rental 1.90 % 4.83 % 3.50 % Rate ^4 Average Rental Equipment represents the cost of rental equipment excluding 1 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. Average Monthly Rental Rate is calculated by dividing the averages of 4 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, 2011 Mobile (dollar Modular TRS-RenTelco Adler Tanks Enviroplex Consolidated amounts in thousands) Revenues Rental $ 79,969 $ 95,694 $ 59,243 $ — $ 234,906 Rental Related 24,063 3,133 12,290 — 39,486 Services Rental 104,032 98,827 71,533 — 274,392 Operations Sales 20,152 25,164 278 20,788 66,382 Other 425 1,324 147 — 1,896 Total Revenues 124,609 125,315 71,958 20,788 342,670 Costs and Expenses Direct Costs of Rental Operations: Depreciation of Rental 13,780 38,039 8,368 — 60,187 Equipment Rental Related 18,835 2,848 9,009 — 30,692 Services Other 21,940 13,272 4,647 — 39,859 Total Direct Costs of 54,555 54,159 22,024 — 130,738 Rental Operations Costs of Sales 14,861 14,087 315 15,878 45,141 Total Costs of 69,416 68,246 22,339 15,878 175,879 Revenue Gross Profit Rental 44,249 44,383 46,228 — 134,860 Rental Related 5,228 285 3,281 — 8,794 Services Rental 49,477 44,668 49,509 — 143,654 Operations Sales 5,291 11,077 (37 ) 4,910 21,241 Other 425 1,324 147 — 1,896 Total Gross 55,193 57,069 49,619 4,910 166,791 Profit Selling and Administrative 32,131 25,921 16,698 3,377 78,127 Expenses Income from $ 23,062 $ 31,148 $ 32,921 $ 1,533 88,664 Operations Interest 7,606 Expense Provision for 31,456 Income taxes Net Income $ 49,602 Other Information Average Rental $ 504,276 $ 258,995 $ 157,917 Equipment ^1 Average Monthly Total 1.32 % 3.08 % 3.13 % Yield ^2 Average 67.1 % 66.0 % 86.2 % Utilization ^3 Average Monthly Rental 1.97 % 4.66 % 3.63 % Rate ^4 Average Rental Equipment represents the cost of rental equipment excluding 1 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. Average Monthly Rental Rate is calculated by dividing the averages of 4 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 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 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 amounts in Three Months Ended Twelve Months Ended thousands) December 31, December 31, 2012 2011 2012 2011 Net Income $ 11,936 $ 13,227 $ 44,777 $ 49,602 Provision for Income 6,915 8,004 28,090 31,456 Taxes Interest 2,282 2,119 9,149 7,606 Income from Operations 21,133 23,350 82,016 88,664 Depreciation and 18,811 17,649 72,476 67,395 Amortization Non-Cash Stock-Based 686 1,512 3,840 5,221 Compensation Adjusted EBITDA ^1 $ 40,638 $ 42,511 $ 158,332 $ 161,280 Adjusted EBITDA Margin 40 % 50 % 43 % 47 % ^2 Reconciliation of Adjusted EBITDA to Net Cash Provided by Operating Activities (dollar amounts in Three Months Ended Twelve Months Ended thousands) December 31, December 31, 2012 2011 2012 2011 Adjusted EBITDA ^1 $ 40,630 $ 42,511 $ 158,332 $ 161,280 Interest Paid (3,253 ) (3,171 ) (9,107 ) (6,877 ) Net Income Taxes (1,209 ) (1,216 ) (5,842 ) 1,480 (Paid) Refund Received Gain on Sale of Rental (3,008 ) (2,731 ) (12,389 ) (12,444 ) Equipment Change in certain assets and liabilities: Accounts Receivable, 7,962 (3,030 ) (415 ) (16,183 ) net Prepaid Expenses and 8,392 (3,117 ) (2,337 ) (3,226 ) Other Assets Accounts Payable and (5,422 ) (4,067 ) (3,717 ) 4,004 Other Liabilities Deferred Income (8,718 ) (364 ) 1,857 1,277 Net Cash Provided by $ 35,374 $ 24,815 $ 126,382 $ 129,311 Operating Activities Adjusted EBITDA is defined as net income before interest expense, provision 1 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
McGrath RentCorp Announces Results for Fourth Quarter 2012
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