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Rental Revenues Increase 3% EPS Decreases 17% to $0.30 for the Quarter
LIVERMORE, Calif., April 30, 2014 (GLOBE NEWSWIRE) -- McGrath RentCorp (Nasdaq:MGRC) (the "Company"), a diversified business-to-business rental company, today announced revenues for the quarter ended March 31, 2014, of $87.5 million, a decrease of 1%, compared to $88.7 million in the first quarter of 2013. The Company reported net income of $7.9 million, or $0.30 per diluted share for the first quarter of 2014, compared to net income of $9.2 million, or $0.36 per diluted share, in the first quarter of 2013.
Dennis Kakures, President and CEO of McGrath RentCorp, made the following comments regarding these results and future expectations:
"Although our first quarter 2014 EPS results are $0.06 per share below the first quarter of 2013, they are in line with our internal forecasting. Due to seasonality, outbound and inbound equipment shipment timing, and other factors, our quarterly results can vary significantly within a given plan year. We are reconfirming our 2014 full year guidance range of between $1.70 and $1.85 per share.
Modular division-wide rental revenues for the quarter increased $2.2 million, or 11%, to $21.5 million from a year ago. This is our fourth consecutive year over year quarterly rental revenue increase. During the first quarter, we experienced a 37% increase in division-wide year over year first month's rental revenue bookings for modular buildings with an increase of 44% in California and 34% outside of the state. Our favorable modular building rental booking trends have continued in the second quarter of 2014. Modular division average utilization for the first quarter rose to 69.9% compared to 66.4% a year ago. This is the highest modular division first quarter average utilization level since 2009.
Modular division income from operations for the quarter increased by $0.1 million, or 4%, to $3.0 million, from a year ago. The lower percentage increase in income from operations compared to rental revenues is primarily due to the increase in divisional booking levels and the significant increase in related inventory center costs for labor and materials to prepare equipment for rental. This is compounded by needing to redeploy various rental assets that have been sitting idle for extended time frames, which tend to have higher processing costs than inventory that turns more frequently. In fact, inventory center costs primarily for the preparation of booked orders and anticipated near-term orders were approximately $2.1 million, or 33% higher than during the first quarter a year ago. These expenditures reinforce our belief that our modular building rental business is experiencing a strong turnaround. We expense the great majority of these costs in the quarter in which they are incurred; however, we expect to benefit from the associated rental revenue stream in the quarters ahead. The increase in inventory center related expenses for the quarter was partially offset by higher gross profit on equipment sales.