Company: MGRC
Filing Date: 2025-04-17
Form Type: CORRESP
Source: 0000950170-25-055353
Chunk: 2

Company: MCGRATH RENTCORP
Filing Date: 2025-04-17
Form: CORRESP
Chunk 2
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 in part to the taxes paid on the gain on sale of the Adler Tanks discontinued operation. Finally, accounts receivable provided $43.9 million higher cash flows in 2024 compared to 2023, primarily due to improved collections of customer billings during the end of 2024.”

Funding of Rental Asset Growth, page 47

Please revise the description of "Cash available for purchase of rental equipment" and "Cash available for other purposes" to state that it is "operating cash" (or similar description) available for these purposes because this is what the measure appears to represent. Refer to Item 10(e)(1)(ii)(E) of Regulation S-K and Question 100.05 of the C&DI.

Company’s Response:

The description of “Cash available for purchase of rental equipment” and “Cash available for other purposes” is to provide investors additional information and insights regarding the other primary sources and uses of cash outside of cash provided by operating activities. We believe this information provides insight regarding cash flows available to meet debt service obligations and working capital requirements. In future filings with the Commission, we advise Staff that beginning with the Company’s Form10-K for the period ending December 31, 2025, for added clarity we will revise the table to reconcile cash provided by operating activities to “Adjusted free cash flow”. We define Adjusted free cash flow as cash provided by operating activities less payments for purchases of rental equipment and property, plant and equipment, and plus proceeds from sale of rental equipment and property, plant and equipment, which are included in cash flows from investing activities; excluding nonrecurring cash taxes paid on sale of discontinued operations and proceeds received from Willscot Mobile Mini merger termination, net of transaction costs. Please see below for an illustration of the revised disclosure and table for the fiscal year ended December 31, 2024:

“The Company defines “Adjusted free cash flow” as cash provided by operating activities less payments for purchases of rental equipment and property, plant and equipment, and plus proceeds from sale of rental equipment and property, plant and equipment, which are included in cash flows from investing activities; excluding nonrecurring taxes paid in cash on sale of discontinued operations and the contractual merger termination payment from WillScot Mobile Mini after deducting the Company’s transaction costs. The Company believes that Adjusted free cash flow provides useful additional information regarding cash flow available to meet debt service obligations and other capital requirements. However, Adjusted free cash flow is not a measure of performance or liquidity under GAAP.