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McGrath RentCorp Announces Results For First Quarter 2011

TRS-RENTELCO

For the first quarter of 2011, the Company’s TRS-RenTelco division reported a 98% increase in income from operations to $6.5 million. Rental revenues increased 19% to $22.1 million. The increase in rental revenues, partly offset by a 2% increase in depreciation to $9.4 million and a 4% increase in other direct costs to $3.0 million, resulted in an increase in gross profit on rental revenues of 52% to $9.7 million. Sales revenues increased 21% to $5.9 million with gross profit on sales increasing 51% to $2.6 million, primarily due to higher gross margins on used equipment sales revenues in the first quarter of 2011. Selling and administrative expenses increased 17% to $6.3 million due to increased salary and benefit costs.

ADLER TANKS

For the first quarter of 2011, the Company’s Adler Tanks division more than tripled its income from operations to $6.0 million. Rental revenues more than doubled to $12.2 million, which resulted in an increase in gross profit on rental revenues of 135% to $9.3 million. Rental related services revenues increased 40% to $2.3 million, with gross profit on rental related services revenues flat at $0.3 million. Selling and administrative expenses increased 35% to $3.6 million, primarily due to increased salary and benefit costs.

OTHER HIGHLIGHTS

  • Debt increased $0.1 million during the quarter to $265.8 million, with the Company’s funded debt (notes payable) to equity ratio decreasing from 0.90 to 1 at December 31, 2010 to 0.88 to 1 at March 31, 2011. As of March 31, 2011, the Company had capacity to borrow an additional $101.2 million under its lines of credit.
  • New senior notes issued April 21, 2011. The Company entered into an agreement for the issuance of $100 million of 4.03% unsecured senior notes. The debt has a five-year average life with a final maturity in April 2018. Proceeds from the offering were used to repay outstanding borrowings under the Company’s revolving credit facilities.
  • Dividend rate increased 2% to $0.23 per share for the first quarter 2011 compared to the first quarter 2010. On an annualized basis, this dividend represents a 3.4% yield on the May 4, 2011 close price of $26.88.
  • Adjusted EBITDA increased 20% to $34.5 million for the first quarter of 2011. At March 31, 2011, the Company’s ratio of funded debt to the last twelve months actual Adjusted EBITDA was 1.93 to 1 compared to 2.01 to 1 at December 31, 2010. Adjusted EBITDA is defined as net income before interest expense, provision for income taxes, depreciation, amortization and other 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

Given our solid first quarter results and encouraging signs for further growth in rental and sales revenues in 2011, the Company’s bias is to increase its earnings guidance range. However, given the current significant California budget deficit and the lack of an imminent resolution to balance the budget, and in turn, the risks and potential negative impact to our modular business in California, the Company has elected at this time to leave its 2011 full-year guidance range unchanged at $1.52-$1.62 per diluted share. The Company will continue to revisit its annual guidance range for 2011 in the quarters ahead.

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