Company: MGRC
Filing Date: 2025-07-24
Form Type: 10-Q
Source: 0000950170-25-098322
Chunk: 16

Company: MCGRATH RENTCORP
Filing Date: 2025-07-24
Form: 10-Q
Item: Part I, Item 1
Chunk 16
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 as filed with the SEC on February 19, 2025 (the “2024 Annual Report”). In preparing the following MD& A, we presume that readers have access to and have read the MD& A in our 2024 Annual Report, pursuant to Instruction 2 to paragraph (b) of Item 303 of Regulation S-K. We undertake no duty to update any of these forward-looking statements after the date of filing of this Form 10-Q to conform such forward-looking statements to actual results or revised expectations, except as otherwise required by law.

General

The Company, incorporated in 1979, is a leading rental provider of relocatable modular buildings for classroom and office space and electronic test equipment for general purpose and communications needs. The Company’s primary emphasis is on equipment rentals. The Company is comprised of four reportable business segments: (1) its modular building segment (“ Mobile Modular”); (2) its portable storage container segment (“ Portable Storage”); (3) its electronic test equipment segment (“ TRS-RenTelco”); and (4) its classroom manufacturing business selling modular buildings used primarily as classrooms in California (“ Enviroplex”).

In the six months ended June 30, 2025, Mobile Modular, Portable Storage, TRS-RenTelco and Enviroplex contributed 63%, 14%, 16% and 7% of the Company’s income before provision for taxes (the equivalent of “pretax income”), respectively, compared to 62%, 24%, 12% and 2% for the same period in 2024.

The Company generates its revenues primarily from the rental of its equipment on operating leases and from sales of equipment occurring in the normal course of business. The Company requires significant capital outlay to purchase its rental inventory and recovers its investment through rental and sales revenues. Rental revenues and certain other service revenues negotiated as part of lease agreements with customers and related costs are recognized on a straight-line basis over the terms of the leases. Sales revenues and related costs are recognized upon delivery and installation of the equipment to customers. Sales revenues are less predictable and can fluctuate from quarter to quarter and year to year depending on customer demands and requirements. Generally, rental revenues less cash operating costs recover the equipment’s capitalized cost in a short period of time relative to the equipment’s potential rental life and when sold, sale proceeds are usually above its net book value.

The Company’s modular revenues (consisting of revenues from Mobile Modular, Kitchens To Go and Enviroplex)