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TheStreet Open House

McGrath RentCorp Announces Results For Third 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 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 September 30,

 

Nine Months Ended September 30,

(in thousands, except per share amounts)     2012     2011     2012     2011
   

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 Equipment 16,163 15,357 47,236 44,794
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 Operations 39,113 33,952 108,908 97,474
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 Expenses   20,848   19,992   63,372   57,238
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 Income Taxes 20,480 25,255 54,016 59,827
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 Share $ 0.235 $ 0.230 $ 0.705 $ 0.690
                         

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 in 2011

101,048 92,671
 
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 and 24,576 shares in 2011

82,449 74,878
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 of Credit 17,693 (64,067 )
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 Disqualifying Disposition of Stock Options

844

408

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), during the period $ 4,633   $ (2,696 )
Dividends Accrued During the period, not yet paid $ 6,156   $ 5,772  
Rental Equipment Acquisitions, not yet paid $ 6,868   $ 5,545  
                 

MCGRATH RENTCORP

BUSINESS SEGMENT DATA (unaudited)

Three Months Ended September 30, 2012

 

 

( dollar amounts in thousands)

 

Mobile Modular

 

TRS- RenTelco

 

Adler Tanks

 

Enviroplex

 

Consolidated

Revenues

         
Rental $ 20,001 $ 26,529 $ 16,888 $ $ 63,418
Rental Related Services   7,227       1,147       4,636           13,010
Rental Operations 27,228 27,676 21,524 76,428
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 Equipment 3,478 9,670 3,015 16,163
Rental Related Services 5,321 949 3,982 10,252
Other   6,679       3,938       2,081           12,698
Total Direct Costs of Rental Operations 15,478 14,557 9,078 39,113
Costs of Sales   4,368       3,009       1,695       7,605     16,677
Total Costs of Revenue   19,846       17,566       10,773       7,605     55,790
 

Gross Profit

Rental 9,844 12,921 11,792 34,557
Rental Related Services   1,906       198       654           2,758
Rental Operations 11,750 13,119 12,446 37,315
Sales 1,293 2,794 40 1,578 5,705
Other   111       447       62           620
Total Gross Profit 13,154 16,360 12,548 1,578 43,640
Selling and Administrative Expenses   8,538       6,210       4,938       1,162     20,848
Income from Operations $ 4,616     $ 10,150     $ 7,610     $ 416 22,792
Interest Expense 2,312
Provision for Income taxes   8,029
Net Income $ 12,451
 

Other Information

Average Rental Equipment 1 $ 526,534 $ 271,983 $ 231,955
Average Monthly Total Yield 2 1.26 % 3.25 % 2.43 %
Average Utilization 3 66.2 % 65.7 % 68.9 %
Average Monthly Rental Rate 4 1.91 % 4.95 % 3.52 %
 

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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