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EPS Increases 3% to $0.39 for the Quarter
LIVERMORE, Calif., July 31, 2014 (GLOBE NEWSWIRE) -- McGrath RentCorp (Nasdaq:MGRC) (the "Company"), a diversified business-to-business rental company, today announced revenues for the quarter ended June 30, 2014, of $95.7 million, an increase of 10%, compared to $87.2 million in the second quarter of 2013. The Company reported net income of $10.2 million, or $0.39 per diluted share for the second quarter of 2014, compared to net income of $9.8 million, or $0.38 per diluted share, in the second quarter of 2013. Second quarter 2014 results included a $0.8 million non-operating gain on sale of an excess property, which contributed $0.02 per diluted share.
Dennis Kakures, President and CEO of McGrath RentCorp, made the following comments regarding these results and future expectations:
"Our second quarter results reflect continued momentum in growing top line Company-wide rental revenues. In fact, this is the seventeenth consecutive year over year quarterly increase in rental revenues for McGrath RentCorp coming out of the Great Recession. Despite this rental revenue growth, overall Company profitability margins continue to be pressured, primarily related to costs associated with preparing rental equipment for new orders and anticipated opportunities in the face of strengthening demand in our modular business. We expect to see overall rental profitability margin improvement in the second half of 2014 due to both the significant quantity of modular building equipment already prepared and scheduled for shipment primarily during the third quarter, as well as buildings that went on rent in the late stages of the second quarter.
Modular division wide rental revenues for the quarter increased $2.7 million, or 14%, to $22.7 million from a year ago. This is our fifth consecutive year over year quarterly rental revenue increase. During the second quarter we experienced a 29% increase in division-wide year over year first month's rental revenue bookings for modular buildings with an increase of 23% in California and 33% outside of the state. Second quarter 2014 modular division average and ending utilization reached 70% and 72%, respectively, an increase from 67% and 68% a year ago. As stated above, we are continuing to experience higher year over year quarterly costs in our inventory centers for labor and materials associated with the preparation of rental equipment for booked orders and anticipated near-term opportunities. These upfront costs are recognized in the quarter in which they are incurred, but should result in favorable margin improvement in the future. Our modular division is firmly on the road back to increasing profitability from having lost over 70% of its annual operating income since its peak in 2007.