Rental revenues increase 4% EPS decreases 10% to $0.38 for the Quarter
LIVERMORE, Calif., July 31, 2013 (GLOBE NEWSWIRE) -- McGrath RentCorp (Nasdaq:MGRC) (the "Company"), a diversified business to business rental company, today announced revenues for the quarter ended June 30, 2013, of $87.1 million, an increase of 4%, compared to $83.8 million in the second quarter of 2012. The Company reported net income of $9.8 million, or $0.38 per diluted share for the second quarter of 2013, compared to net income of $10.5 million, or $0.42 per diluted share, in the second quarter of 2012.
Dennis Kakures, President and CEO of McGrath RentCorp, made the following comments regarding these results and future expectations:"Although we are disappointed that Company-wide rental revenues increased by only 4% and EPS declined by 10% from a year ago, we are pleased with the underlying favorable business activity levels and momentum we are seeing overall in our rental business portfolio. The primary factor for the quarterly earnings shortfall of $0.04 from a year ago was higher inventory center expenses in our modular division for the preparation of equipment related to increased order activity levels, and secondarily, lower results at Enviroplex. Rental revenues at Adler Tank Rentals, our tank and box division, increased by $1.7 million, or 11%, to $17.7 million from a year ago. Despite this positive growth, these results were significantly below our internal projections. This shortfall was chiefly related to various large rental projects coming off rent over the first half of 2013. We also were impacted negatively by a much more competitive gas and oil shale fracking rental market, specifically for 21K standard tanks. This impacted both rental rates and rental terms negatively. For the first half of 2013, first month's rent and units booked were actually up 43% and 45% respectively, over 2012 levels. Additionally, second quarter 2013 first month's rent and units booked were up sequentially from the first quarter of 2013, 34% and 31% respectively. However, these strong increases in new business activity were partially offset by higher than expected equipment returns. Ending second quarter 2013 equipment utilization increased to 68.7% from 67.5% a year ago, and 63.5% at the end of the first quarter 2013. The dollar value of equipment on rent at the end of the second quarter of 2013 increased to $181.4 million from $153.0 million a year ago, and $162.6 million at the end of the first quarter of 2013.