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TheStreet Open House

McGrath RentCorp Announces Results For Second Quarter 2012

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 June 30, 2012 filed with the SEC on July 31, 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 June 30,   Six Months Ended June 30,
(in thousands, except per share amounts)     2012     2011     2012     2011
     

REVENUES

Rental $ 60,389 $ 57,118 $ 119,909 $ 111,144
Rental Related Services   11,028   9,387   21,693   17,879
Rental Operations 71,417 66,505 141,602 129,023
Sales 11,830 12,489 19,936 22,423
Other   518   515   1,156   1,100
Total Revenues   83,765   79,509   162,694   152,546

 

COSTS AND EXPENSES

Direct Costs of Rental Operations
Depreciation of Rental Equipment 15,672 14,842 31,073 29,437
Rental Related Services 9,011 7,139 17,564 13,880
Other   10,718   10,665   21,158   20,205
Total Direct Costs of Rental Operations 35,401 32,646 69,795 63,522
Costs of Sales   7,584   7,525   12,284   13,770
Total Costs of Revenues   42,985   40,171   82,079   77,292
Gross Profit 40,780 39,338 80,615 75,254
Selling and Administrative Expenses   21,163   18,624   42,524   37,246
Income from Operations 19,617 20,714 38,091 38,008
Interest Expense   2,382   1,954   4,555   3,436
Income Before Provision for Income Taxes 17,235 18,760 33,536 34,572
Provision for Income Taxes   6,756   7,354   13,146   13,552
Net Income $ 10,479 $ 11,406 $ 20,390 $ 21,020
 
Earnings Per Share:
Basic $ 0.42 $ 0.47 $ 0.83 $ 0.87
Diluted $ 0.42 $ 0.46 $ 0.81 $ 0.85
Shares Used in Per Share Calculation:
Basic 24,765 24,340 24,702 24,299
Diluted 25,149 24,742 25,139 24,700
 
Cash Dividends Declared Per Share $ 0.235 $ 0.230 $ 0.470 $ 0.460

MCGRATH RENTCORP
CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

  June 30,   December 31,
(in thousands)     2012       2011  
 

ASSETS

Cash $ 340 $ 1,229

Accounts Receivable, net of allowance for doubtful accounts of $2,200 in 2012 and $1,500 in 2011

86,402 92,671
 
Rental Equipment, at cost:
Relocatable Modular Buildings 547,248 539,147
Electronic Test Equipment 270,747 258,586
Liquid and Solid Containment Tanks and Boxes   235,022     201,456  
1,053,017 999,189
Less Accumulated Depreciation   (342,099 )   (326,043 )
Rental Equipment, net   710,918     673,146  
 
Property, Plant and Equipment, net 99,731 94,702
Prepaid Expenses and Other Assets 26,659 17,170
Intangible Assets, net 11,899 12,311
Goodwill   27,700     27,700  
Total Assets $ 963,649   $ 918,929  
 

LIABILITIES AND SHAREHOLDERS’ EQUITY

Liabilities:
Notes Payable $ 308,000 $ 296,500
Accounts Payable and Accrued Liabilities 64,822 58,854
Deferred Income 28,714 25,067
Deferred Income Taxes, net   214,613     205,366  
Total Liabilities   616,149     585,787  
 
Shareholders’ Equity:
Common Stock, no par value -
Authorized -- 40,000 shares

Issued and Outstanding -- 24,772 shares in 2012 and 24,576 shares in 2011

80,725 74,878
Retained Earnings   266,775     258,264  
Total Shareholders’ Equity   347,500     333,142  
Total Liabilities and Shareholders’ Equity $ 963,649   $ 918,929  

MCGRATH RENTCORP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

  Six Months Ended June 30,
(in thousands)     2012       2011  
 

CASH FLOWS FROM OPERATING ACTIVITIES:

Net Income $ 20,390 $ 21,020

Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:

Depreciation and Amortization 35,339 32,636
Provision for Doubtful Accounts 1,301 825
Non-Cash Stock-Based Compensation 2,077 2,127
Gain on Sale of Used Rental Equipment (5,968 ) (6,496 )
Change In:
Accounts Receivable 4,968 (3,167 )
Income Taxes Receivable 6,131
Prepaid Expenses and Other Assets (9,489 ) (8,821 )
Accounts Payable and Accrued Liabilities 3,761 9,887
Deferred Income 3,647 7,191
Deferred Income Taxes   9,247     10,116  

Net Cash Provided by Operating Activities

  65,273     71,449  

 

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of Rental Equipment (73,281 ) (71,160 )
Purchase of Property, Plant and Equipment (8,883 ) (10,828 )
Proceeds from Sale of Used Rental Equipment   12,206     13,703  
Net Cash Used in Investing Activities   (69,958 )   (68,285 )
 

CASH FLOWS FROM FINANCING ACTIVITIES:

Net Borrowings (Repayments) Under Bank Lines of Credit 11,500 (83,140 )
Borrowings Under Private Placement 100,000
Principal Payments on Senior Notes (12,000 )
Proceeds from the Exercise of Stock Options 3,086 1,770

Excess Tax Benefit from Exercise and Disqualifying Disposition of Stock Options

684

696

Payment of Dividends   (11,474 )   (11,043 )
Net Cash Provided by (Used in) Financing Activities   3,796     (3,717 )
 
Net Decrease in Cash (889 ) (553 )
Cash Balance, beginning of period   1,229     990  
Cash Balance, end of period $ 340   $ 437  
 
Interest Paid, during the period $ 4,616   $ 2,658  
Net Income Taxes Paid (Refunds Received), during the period $ 3,216   $ (3,598 )
Dividends Accrued During the period, not yet paid $ 6,057   $ 5,376  
Rental Equipment Acquisition, not yet paid $ 9,989   $ 11,812  

MCGRATH RENTCORP

BUSINESS SEGMENT DATA (unaudited)

Three Months Ended June 30, 2012

 

( dollar amounts in thousands)

 

Mobile Modular

 

TRS- RenTelco

 

Adler Tanks

 

Enviroplex

 

Consolidated

Revenues

         
Rental $ 19,522 $ 24,855 $ 16,012 $ $ 60,389
Rental Related Services   6,080       855       4,093           11,028
Rental Operations 25,602 25,710 20,105 71,417
Sales 2,061 4,524 529 4,716 11,830
Other   117       371       30           518
Total Revenues   27,780       30,605       20,664       4,716     83,765
 

Costs and Expenses

Direct Costs of Rental Operations:
Depreciation of Rental Equipment 3,485 9,326 2,861 15,672
Rental Related Services 5,034 906 3,071 9,011
Other   5,706       3,360       1,652           10,718

Total Direct Costs of Rental Operations

14,225 13,592 7,584 35,401
Costs of Sales   1,531       2,225       382       3,446     7,584
Total Costs of Revenues   15,756       15,817       7,966       3,446     42,985
 

Gross Profit (Loss)

Rental 10,331 12,169 11,499 33,999
Rental Related Services   1,046       (51 )     1,022           2,017
Rental Operations 11,377 12,118 12,521 36,016
Sales 530 2,299 147 1,270 4,246
Other   117       371       30           518
Total Gross Profit 12,024 14,788 12,698 1,270 40,780
Selling and Administrative Expenses   8,292       6,409       5,312       1,150     21,163
Income from Operations $ 3,732     $ 8,379     $ 7,386     $ 120 19,617
Interest Expense 2,382
Provision for Income taxes   6,756
Net Income $ 10,479
 

Other Information

Average Rental Equipment 1 $ 520,569 $ 265,793 $ 218,466
Average Rental Equipment on Rent $ 342,438 $ 175,524 $ 153,580
Average Monthly Total Yield 2 1.25 % 3.12 % 2.44 %
Average Utilization 3 65.8 % 66.0 % 70.3 %
Average Monthly Rental Rate 4 1.90 % 4.72 % 3.48 %
 

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.

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