Company: MGRC
Filing Date: 2025-04-17
Form Type: CORRESP
Source: 0000950170-25-055353
Chunk: 5

Company: MCGRATH RENTCORP
Filing Date: 2025-04-17
Form: CORRESP
Chunk 5
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 as primarily determined by the Company’s Chief Operating Decision Maker. The resource allocation process is primarily focused on the management of the Company’s rental fleet and the related purchases of rental equipment, along with determination of employee headcount. The impact of resource allocation is assessed by analyzing gross profit, income from operations and income before provision for income taxes amongst other performance metrics as identified in the Other Selected

Securities and Exchange Commission

April 17, 2025
Page6

Information in the segment footnote. Please see below for an illustration of the revised segment disclosure.

“FASB guidelines establish annual and interim reporting standards for an enterprise’s operating segments and related disclosures about its products, services, geographic areas and major customers. In accordance with these guidelines, the Company’s four reportable segments are Mobile Modular, Portable Storage, TRS-RenTelco and Enviroplex. The Company's Chief Operating Decision Maker ("CODM") Joe Hanna, Chief Executive Officer, and senior management focus on several key measures to evaluate and assess each segment’s performance, including rental, rental related services and sales revenue growth, gross profit, income from operations and income before provision for income taxes. In addition to the evaluation of the aforementioned key measures of each reportable segment, the CODM and senior management evaluate supplemental information by reportable segment, such as rental equipment acquisitions, fleet utilization, and average utilization, to further assess segment performance and the future allocation of Company resources.

The CODM is the primary individual in control of resource allocation, and the allocation determinations are made in consultation with the Company’s senior management, of which the CODM is a member. The most significant allocation determinations made by the CODM pertain to purchases of rental equipment and employee headcount. These determinations are generally made as part of the annual budgeting process, with regular reviews occurring throughout the year that can result in allocation changes depending upon performance against budget. On a monthly basis, the CODM considers period end and average rental equipment utilization and budget-to-actual variances to gross profit, income from operations and income before provision for income taxes when making decisions about allocating capital and employee resources to the segments. Excluding interest expense, allocations of revenue and expense not directly associated with one of these segments are generally allocated to Mobile Modular, Portable Storage and TRS-RenTelco, based on their pro-rata share of direct revenues. Interest expense is allocated amongst Mobile Modular, Portable Storage and TRS-RenTelco based on their pro-rata share of average rental equipment at cost