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McGrath RentCorp Announces Results For First Quarter 2013

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 thousands) Three Months Ended March 31, Twelve Months Ended March 31,
  2013 2012 2013 2012
Net Income  $ 9,215  $ 9,911  44,081  $ 49,899
Provision for Income Taxes  5,942  6,390  27,642  31,648
Interest  2,203  2,173 9,179 8,297
Income from Operations 17,360 18,474  80,902  89,844
Depreciation and Amortization  18,808  17,516  73,768  68,737
Non-Cash Stock-Based Compensation  1,126  994  3,972  5,191
Adjusted EBITDA 1  $ 37,294  $ 36,984  $ 158,642  $163,772
Adjusted EBITDA Margin 2  42%  47%  42%  47%
Reconciliation of Adjusted EBITDA to Net Cash Provided by Operating Activities
( dollar amounts in thousands) Three Months Ended March 31, Twelve Months Ended March 31,
  2013 2012 2013 2012
Adjusted EBITDA 1  $ 37,294  $ 36,984  $ 158,642  $ 163,772
Interest Paid  (1,276)  (1,071)  (9,312)  (6,613)
Net Income Taxes Paid (1,519) (1,199)  (6,162)  (4,786)
Gain on Sale of Rental Equipment  (3,334)  (3,073)  (12,650)  (12,462)
Change in certain assets and liabilities:        
Accounts Receivable, net  4,534  7,705  (3,586)  (10,043)
Prepaid Expenses and Other Assets  5,528  (4,156)  7,346  (4,439)
Accounts Payable and Other Liabilities 6,675  (1,697)  4,656  5,219
Deferred Income  (6,282)  1,989 (6,414) (1,255)
Net Cash Provided by Operating Activities  $ 41,620  $ 35,482  $ 132,520  $ 129,393
1  Adjusted EBITDA is defined as net income before interest expense, provision 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: Keith E. Pratt
         Chief Financial Officer
         925 606 9200

McGrath RentCorp logo

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