McGrath RentCorp (NASDAQ:MGRC), a diversified business to business rental company, today announced revenues for the quarter ended September 30, 2010, of $83.2 million, an increase of 10%, compared to $75.5 million in the third quarter of 2009. The Company reported net income of $9.7 million, or $0.40 per diluted share for the third quarter 2010, compared to net income of $9.5 million, or $0.40 per diluted share, in the third quarter 2009.
Dennis Kakures, President and CEO of McGrath RentCorp, made the following comments regarding these results and future expectations:
“Our Company-wide 15% increase in rental revenues from a year ago reflects very strong business activity and rental revenue increases in both our electronics and tank rental businesses. These very positive results were partly offset by our modular rental business rental revenues declining by 7% for the same comparative period; however, modular rental revenues were higher sequentially from the second quarter by 2%.
For our electronics division, rental revenues for the period increased by $3.3 million or 18% to $21.8 million from a year ago. However, income from operations nearly doubled to $6.5 million. In addition to the higher rental revenue levels, our electronics business also benefited from lower depreciation expense, and higher gross profit on equipment sales.
Our tank rental business more than doubled rental revenues to $10.0 million from a year ago. The strong increase in rental revenues was directly related to higher business activity levels, supported by new branch locations, a larger sales force and expanding Adler’s rental equipment inventory. Income from operations was up over three-fold from a year ago to $5.1 million as the business more fully leveraged prior quarter new employee and other infrastructure investments.
Our modular division rental revenues for the third quarter decreased by $1.6 million, or 7%, to $20.9 million from a year ago. Rental revenues rose by $0.5 million, or 2% sequentially from the second quarter of 2010. This was the first sequential quarterly increase in rental revenues since the third quarter of 2008. However, income from operations declined by 53% to $5.7 million from a year ago. The significant reduction in income from operations compared to the much smaller decrease in rental revenue was due primarily to substantially higher inventory center labor and material costs, and secondarily to lower rental related services and sales gross profit levels. The increased inventory center costs were associated with a number of larger, highly customized commercial building complexes, and the preparation of a higher volume of classroom buildings during the quarter. We anticipate that our modular inventory center costs will be markedly lower during the fourth quarter.