McGrath RentCorp — Third Quarter 2026 Earnings Summary

Financial Performance:

• Total revenues increased 7% year-over-year to $274.6 million for the quarter ended September 30, 2026, compared to $256.4 million in the prior year period.
• Net income rose to $48.8 million ($2.00 per diluted share) from $42.3 million ($1.72 per diluted share) in the third quarter of 2025.
• Income from operations increased 11% to $73.9 million, up from $66.7 million in the prior year quarter.
• Adjusted EBITDA increased 10% to $106.5 million, compared to $96.5 million in the prior year quarter.
• Rental operations revenues grew 6% to $189.5 million, while sales revenues increased 9% to $82.9 million.
• Gross profit on rental revenues increased 2% to $49.0 million for Mobile Modular, while gross profit on sales revenues decreased 10% to $16.8 million due to lower new equipment sales.
• For the Portable Storage division, gross profit on rental revenues decreased 4% to $13.4 million, and gross profit on sales revenues decreased to $0.8 million.
• TRS-RenTelco reported a 42% increase in gross profit on rental revenues to $17.2 million and an 8% increase in gross profit on sales revenues to $4.5 million.
• Selling and administrative expenses increased 8% to $56.9 million for the quarter.
• Depreciation expense increased 11% to $12.0 million for Mobile Modular, 5% to $1.1 million for Portable Storage, and 15% for TRS-RenTelco.
• Cash dividends declared were $0.495 per share for the quarter.

Guidance and Future Outlook:

• Total revenue guidance for the full year 2026 was lowered to a range of $945 million to $960 million, down from the previous $955 million to $985 million, primarily due to lower Mobile Modular new equipment sales.
• Adjusted EBITDA guidance for the full year 2026 was narrowed to a range of $365 million to $373 million, with the midpoint unchanged from the previous $363 million to $375 million range.
• Gross rental equipment capital expenditures guidance for the remainder of 2026 was increased to $270 million to $290 million, up from the previous $200 million to $220 million, to support rental operations momentum at Mobile Modular and TRS-RenTelco.
• Management expects continued positive rental operations momentum and investment at Mobile Modular and TRS, offset by lower Modular new equipment sales.

Business Segments and Product Lines:

• Mobile Modular: Rental revenues increased 4% to $86.9 million, driven by steady progress and growth in the commercial customer base, particularly large commercial projects and regional expansion. Sales revenues decreased 10% to $47.1 million due to lower new equipment sales. Adjusted EBITDA decreased 3% to $62.6 million.
• Portable Storage: Rental revenues decreased 3% to $16.8 million as market demand conditions remained soft. Higher costs for equipment preparation, trucking, and sales coverage pressured margins, resulting in a negative gross margin on rental related services of 25% compared to 13% in the prior year. Sales revenues decreased 16% to $2.3 million. Adjusted EBITDA decreased 20% to $7.4 million.
• TRS-RenTelco: Rental revenues increased 26% to $35.4 million, driven by robust demand and projects supporting new data center buildouts. Sales revenues increased 7% to $7.9 million. Adjusted EBITDA increased 27% to $25.7 million.
• The company made additional capital investments in rental fleet at Mobile Modular and TRS-RenTelco to support strong market conditions and positive outlooks.

Market and Competitive Landscape:

• Mobile Modular experienced positive business momentum with continued growth from the commercial customer base and progress in regional expansion efforts.
• TRS-RenTelco benefited from robust demand driven by projects supporting the buildout of new data centers.
• Portable Storage faced soft market demand conditions and higher operational costs for equipment preparation and trucking.
• The company operates in the modular solutions and electronic test equipment rental markets, focusing on the circular supply economy.

Risks and Challenges:

• Risks include the continued impact of tariff actions, macroeconomic factors, fiscal policy uncertainty, government budgetary constraints, and political, geopolitical, or regulatory developments.
• Specific segment risks include fuel costs, the health of the education and commercial markets in the modular building division, competition within the modular business, and activity levels in the semiconductor and general purpose communications test equipment markets at TRS-RenTelco.
• Challenges involve the activity levels in commercial construction projects impacting the Portable Storage segment, the ability to successfully increase prices to offset cost increases, and the ability to effectively manage rental assets.
• The company faces risks related to retaining and attracting talent and uncertainty associated with the Chief Executive Officer transition.

Management Commentary and Tone:

• Phil Hawkins, President and CEO, expressed pleasure with the third-quarter results, citing a 7% companywide revenue increase driven by higher rental operations.
• Management noted steady progress at Mobile Modular and TRS-RenTelco, with Mobile Modular showing growth in commercial projects and TRS-RenTelco benefiting from data center buildouts.
• Management acknowledged margin pressure in Portable Storage due to higher costs for equipment preparation, trucking, and sales coverage.
• The tone reflected confidence in the updated outlook for continued positive rental operations momentum, while acknowledging the offset of lower Modular new equipment sales.

Other Key Points:

• The company has maintained over 35 consecutive years of annual dividend increases to shareholders.
• Cash balance increased to $1.038 million at September 30, 2026, from $295,000 at December 31, 2025.
• Notes payable increased to $618.3 million at September 30, 2026, from $514.9 million at December 31, 2025.
• Deferred income increased to $145.1 million at September 30, 2026, from $110.6 million at December 31, 2025.
• During the nine months ended September 30, 2026, the company sold a corporate property resulting in a net gain on sale of $1.814 million.
• The company repurchased common stock for $34.2 million during the nine months ended September 30, 2026.
• Net cash provided by operating activities for the nine months ended September 30, 2026, was $178.0 million, compared to $174.8 million in the prior year period.
• Net cash used in investing activities for the nine months ended September 30, 2026, was $203.5 million, primarily due to purchases of rental equipment of $218.7 million.