MGRC

Image source: The Motley Fool. Wednesday, July 29, 2026 at 5:00 p.m. ET Chief Executive Officer - Philip Hawkins Chief Financial Officer - Keith E. Pratt Operator: You for your continued patience. Your meeting will begin shortly. Assistance at any time, please press 0 and a member of our team will be happy to help you. Press 0, and a member of our team will be happy to help you. Please standby. Your meeting is about to begin. Ladies and gentlemen, thank you for standing by. Welcome to the McGrath Rent Corp Second Quarter 26 Earnings Call. At this time, all conference participants are in a listen-only mode. Later, we will conduct a question and answer session. At that time, if you have a question, This conference call is being recorded today. Wednesday, July 29, 2026. Before we begin, note that the matters the company management will be discussing today that are not statements of historical facts are forward looking statements within the meaning of the Private Securities Litigation Reform Act of 2000 including statements relating to the company's expectations, strategies, prospects, backlog or targets. These forward looking statements are not guarantees of future performance, and involve significant risks and uncertainties that could cause our actual results to differ materially from those projected. Important factors that could cause actual results to differ materially from the company's expectations are disclosed under Risk Factors in the company's Form 10-Ks and other SEC filings. Forward looking statements are made only as of the date hereof. Except as otherwise required by law, we assume no obligation to update any forward looking statements. In addition to the press release issued today, the company also filed with the SEC the earnings release on Form 8-K and its Form 10 Q for the quarter ended June 30, 2026. Speaking today will be Philip Hawkins, Chief Executive Officer and Keith E. Pratt, Chief Financial Officer. I will now turn the call over to Mr. Hawkins. Go ahead, sir. Philip Hawkins: Thank you, Chloe. Good afternoon, everyone. And thank you for joining us today. For McGrath Rent Corp.'s Second Quarter 2026 Earnings Call. I am glad to be here to report on our performance over the past quarter. To provide an update on our outlook for this year. I will discuss current market demand conditions and share our progress on strategic growth initiatives. First, our quarterly results. We are pleased to see rental operations revenues up 6 percent year over year, driven by continued momentum in our 2 largest rental businesses, both Mobile Modular and TRS RenTelco grew rental revenues and improved utilization sequentially during the quarter. Offsetting these positive rental operations results lower new equipment sales at Enviroplex, and Mobile Modular. And several projects pushed to the second half of the year. As a result, total company revenues decreased 6 percent. And adjusted EBITDA decreased 4 percent. Focusing first on Mobile Modular. We saw growing momentum in our rental operations. Rental revenues grew 2 percent in the quarter and bookings increased 11 percent compared to a year ago. While demand conditions remain mixed, our larger commercial project opportunities continue to be strong. And activity in smaller local markets has been more stable. We are also having success in the geographic expansion markets where we added sales coverage, and deployed capital. I am particularly encouraged by the positive operational trends in the Modular business. Utilization improved sequentially for the first time since 2022. Units on rent have increased the last 4 months in a row and we ended the quarter with more units on rent than at the beginning of the year. This inflection and higher year over year bookings in the first half of 2026, I feel positive about the outlook for the 0.5 to 1.5% year over year. Site related services revenues were down slightly from the quarter, higher for the first half. Looking at the market for new modular sales, overall demand and pipeline activity, remained stable. And similar to last year. Turning to our Portable Storage business. Rental revenues were flat We continue to see challenging demand conditions in local commercial construction markets, which are a larger component of the mix for this business. Our team remains focused on getting more units out on rent, through expanding sales coverage and targeting adjacent geographic markets. Lastly, turning to TRS, rental revenues continued their impressive growth trajectory and were up 17 percent. Demand remained healthy across several key end markets. Including data centers, aerospace and defense, and semiconductors. Team is executing well in a strong market environment and is entering the second half of the year with solid momentum in the business. Summing up, across the McGrath businesses, we delivered rental operations revenue growth in a mixed demand environment. I am pleased with our momentum going into the second half of the year. Our modular geographic and services expansion initiatives are providing us with several growth opportunities that are not dependent on recovery the nonresidential construction market. And our strong balance sheet gives us the flexibility to fund organic growth, support a steadily increasing dividend and retain capacity for strategic M&A and share repurchases. I would like to thank our team for your dedication, deep expertise and customer engagement that are truly competitive differentiators. And our customers and shareholders for your trust and investment in our company. With that, I will turn the call over to Keith to take you through the financial details of our quarter and our updated outlook for the full year. Keith E. Pratt: Thank you, Philip, and good afternoon, everyone. As Phil highlighted, second quarter results reflected continuing growth in rental operations revenue offset by lower sales revenue at Enviroplex and Mobile Modular. Total revenues decreased 6 percent to $221 million and adjusted EBITDA decreased 4 percent to $83 million Reviewing Mobile Modular's operating performance as compared to the second quarter of 2025, total revenues for Mobile Modular decreased 4 percent to $150 million and adjusted EBITDA decreased 4 percent to $51 million Rental operations showed steady progress and saw 2 percent higher rental revenues driven by growth from our commercial customer base, and 8 percent higher rental related services revenues. Inventory center costs increased by $2.1 million as we invested to prepare equipment to meet stronger demand and higher shipment levels, in the second half. This expense compressed rental margins to 55% down from 58% a year ago. Sales revenues decreased $9.3 million to $31.2 million primarily due to lower new sales projects during the quarter as several projects shifted to the second half of the year. Average fleet utilization was 70.1%, compared to 73.7% a year ago. Utilization modestly improved from 70% in the first quarter and ended the second quarter at 70.6% as shipments exceeded returns during the quarter. While these were small incremental changes, we view them as positive indicators as we return to growth in units on rent. Revenue per unit trends were favorable. Second quarter monthly revenue per unit on rent increased 7% to $922 For new shipments over the last 12 months, the average monthly revenue per unit increased 7 percent to $12.52 There is still a positive pricing tailwind opportunity as our fleet churns. We continue to make progress with our modular services offerings Mobile Modular Plus revenues increased to $10.5 million from $9.2 million a year earlier. Site related services revenues were $6 million compared to $6.5 million in the prior year, but remained above 2025 on a year to date basis. Turning to the review of portable storage. Total revenues for portable storage increased 1 percent to $24 million and adjusted EBITDA was $8 million a decrease of 23 percent compared to the prior year. Rental revenues were $17 million flat compared to last year and rental margins were 80%, down from 83% a year earlier. As Phil mentioned, demand conditions in small local commercial construction markets remain challenging. Adjusted EBITDA was impacted by higher fleet preparation costs pressure on rental related services margins in a competitive environment, and investments in sales coverage to support future growth. Average utilization for the quarter was 58.3%, compared to 61.1% a year ago. Turning now to the review of TRS RenTelco. TRS delivered another strong quarter. With total revenues up 17 percent to $43 million and adjusted EBITDA up 29 percent to $25 million Rental revenues increased 17 percent to $32 million benefiting from improved demand conditions including projects supporting data center build outs. Rental margins improved to 48% from 44% a year ago. Average utilization for the quarter was 68.1%, up from 64.8% a year ago. PRS utilization ended the quarter at 68.9%, Our highest utilization level since the first quarter of 21. Sales revenues increased 13 percent to $8.7 million and gross margins were 66% compared to 47% a year ago. Lastly, on Enviroplex, compared to a very strong second quarter in 2025, Enviroplex total sales revenue decreased to $4.6 million from $19.9 million and adjusted EBITDA declined to a loss of $500 thousand from a profit of $4.3 million The decline was primarily driven by project timing, with several project completions shifting to the second half of the year. The remainder of my comments will be on a total company basis. Second quarter selling and administrative expenses increased $2.9 million to $56.4 million primarily due to investments to support our modular geographic expansion. Interest expense was $7.1 million a decrease of $700 thousand as a result of lower interest rates during the quarter. The second quarter provision for income taxes is based on an effective tax rate of 27%. Compared to 27.3% a year earlier. Turning to our year to date cash flow highlights. Net cash provided by operating activities was $106 million compared to $110 million last year Rental equipment purchases were $124 million compared to $50 million last year as we increased investment in modular geographic expansion opportunities and to support higher demand at TRS. In addition to investments in new fleet, healthy cash generation allowed us to pay $25 million in shareholder dividends and to complete $27 million of share repurchases. At quarter end, we had net borrowings of $590 million and the ratio of funded debt to the last 12 months actual adjusted EBITDA was 1.65 to 1 Lastly, we are updating our outlook for 2026. The midpoints for our revenue and adjusted EBITDA ranges are unchanged. While we tightened up the ranges, now that we are halfway through the year. We have also increased our gross rental equipment CapEx to support incremental investment in TRS. Relative to our original outlook, we continue to expect strength in the Modular business. Stronger than expected performance of TRS, should offset weaker performance at portable storage. And at Enviroplex, we continue to expect performance to be similar to 2024. We now expect total revenue between $955 million and $985 million adjusted EBITDA between $363 million and $375 million and gross rental equipment capital expenditures between $200 million and $220 million As we entered the second half of the year, our focus remains on disciplined execution, prudent capital allocation, and delivering long term shareholder value. That concludes our prepared remarks. Chloe, you may now open the lines for questions. Operator: Thank you. The floor is now open for questions. Again, we ask that you pick up your handset Our first question is coming from Manav Patnaik with Barclays. Ronen Kennedy: Hi, this is Ronen Kennedy on for Manav. Thank you for taking our questions. Noted shipments exceeded returns in each month of the quarter. Could you provide some color on the extent to which that was driven primarily by large commercial projects and specific end markets versus the regional expansion efforts or broader improvement across the customer base? Also interested in your comments as to whether that trend has continued into July. And a final part to the question, if I may, if not mistaken, I think Philip had mentioned inflection. So curious as to how you would characterize it. Is this the long awaited inflection utilization? Are we in the recovery? And your thoughts there? Philip Hawkins: Sure, Ronen. I will start there. And then Keith can weigh in a little bit. Starting with the utilization trend, I am optimistic about the sequential utilization improvement that we have had in modulars. Here in the second quarter. As we mentioned, that is the first time in 4 years. it is really being driven by more mega project wins as you mentioned, commercial. A combination of that with our geographic expansion initiatives. So that is getting a nice lift to our commercial utilization. And partially offsetting some net returns in the education side. We kind of jumping to your inflection, I think we feel good that kind of the trends changed. We may not see this move up every single quarter consistently, but we do believe we turn the corner on the trend on the modular side. And have strong momentum there in the second half of the year. Keith, anything you would like to add there? Keith E. Pratt: Yes. Again, we would emphasize these are very encouraging signs. But they are just the beginning of the turn. I think Philip is spot on with saying we want to build on this. But it is small shifts. And we hope to build on that as we go forward. I do not think it will necessarily be linear every single month. But it is definitely a shift in the trend that we have seen over a number of quarters and over a number of years. Ronen Kennedy: Got it. And then obviously, continued weakness within portable storage. Mean what is it beyond the end market weakness and the bifurcation in the market that is consistently being spoken to by your peers and reflected in the industry data? Is there anything else beyond end market weakness? Is there certain things happening in certain geographies? Or exposures, competitive dynamics? And then are there leading indicators we can look to, to suggest perhaps it improves in 2027 versus remaining stuck in the current demand dynamics? Philip Hawkins: Sure. I can take that. I think that is consistent days for portable storage are all around that smaller local market project dynamic, the 1 that we have been talking about for several quarters. And combined with industry utilization being lower, so a highly competitive market, lots of people trying to get units out on rent. So nothing's changed there. there is not any regional dynamics or differences. That I would call out as material. it is really those 2 macro themes. And I think you are really talking about needing improvement in the nonresidential construction those small local project markets before we see any kind of meaningful move there. That would be a nice accelerator for portable solar GaN modules when it happens. We are not expecting that to take place this year. Got it. Thank you. Ronen Kennedy: And then can you remind us if you have either characterized or provided color around your exposure to those large long duration projects whether it be mega and also data center specific? Philip Hawkins: We have not quantified that, Ronen. But I think what I would say there is we are they are a meaningful part of our new business volume. And the bookings there, as we have talked about, have remained strong. Thing I like to highlight is those projects really play directly to our strengths. The deep experience of our team, capabilities of our operating infrastructure and the scale of our modular solutions offerings, which are with very few competitors. Can bring all that together in the way we can. The other opportunity with those mega projects, data centers in particular, opportunity to bring all of our rental products to that site. So we have got everything from modular buildings, modular kitchen dormitories and electronic test equipment in the case of data centers. So, it is important, part of the new business, in the scale of the overall fleet and revenue mix. Mix. Keith, anything you want to add there? Keith E. Pratt: Yes. I think that is a good summary. And Ronan, as we track the data, and you will see in our IR pack, we have got a good view of the different end markets that we serve. We just do not have mega projects or even data centers as an identified item. Sometimes it is captured in our systems as another project with a large contractor that we have a relationship with and frequently do projects with. So, again, I think Bill characterized it appropriately, it is a strong part of the new business flow. But we have a big fleet and so it is takes a lot to move the needle on that big fleet. Ronen Kennedy: Got it. And if I may, I will just, I will finish with a question with a multi parter. On the sales decline. Are you helping with how to think how much of that was the Enviroplex versus the mobile modular? And then I think you indicated it is primarily due to lower used sales in several modular sales transactions that were expected in the year shifted into the second half. So any further color or context on the drivers there? And then what gives you confidence in that timing shift? Is there anything to read through with regards to broader demand it sales activity tends to be more sensitive to project timing and customer CapEx decisions in rental, anything you have to be mindful of, just for the context of that. Sale of the client. Keith E. Pratt: Sure. Absolutely, I will jump in and sort of get the topic started. Really what we ran into are things that we often see in this part of the business. And these are new sales projects at Enviroplex or on the modular side of the business. And frequently we will run into site readiness issues. This could be the customer has to get a permit. It could be they are dealing with issues that have to be completed before we start like foundation work, things like that. And then at the end of a project, there are also other things that have to be done before we can complete the project. An example would be the local utility putting a power hookup at the site. So these are things we went into. I would say when we looked at this quarter, we had several of those that impacted projects that were a little larger and caused them to shift. In some cases, the shift is just a matter of weeks. In others, it is several months. But these are all projects that we have under contract. Going to complete them. And I think the cadence by quarter was maybe a little different from what we have seen in the past. And a little bit different maybe from what we expected. But nothing highly unusual in terms of the factors that caused the delays. That would be the sort of overall comment. Philip, I do not know if there is anything you would like to add. Philip Hawkins: I think you described it well. Maybe I will just add these are not projects canceling and falling out of the pipeline, just completion dates shifting. From when we originally expected it. there is really nothing in the underlying market demand that we are worried about. We really see that as being solid, consistent with where it was a year ago. And I am sure just the size and scope of these sale projects that sometimes are difficult to predict. Given things outside of our scope on the site. Keith E. Pratt: Yes. We did foreshadow Ronin that Enviroplex would have a lower sales year. We commented on that back in February. And again, just to calibrate things, Enviroplex had a very strong revenue year in 2025. They had $57 million in revenue. We commented we thought this year would be much closer to 2024 when they did $46 million We have still got that same view. If you look year to date, we just have not recognized a lot of those sales. For EnviroPlex, we have recognized $8 million year to date. A year ago, it was $27 million year to date. So a big part of the difference this year is the timing around those Enviroflex sales. There will be less of them for the full year and they are definitely more weighted to the second half. And then with modulars sort of similar comments, but not as big of a shift in the numbers. Got it. Ronen Kennedy: Thank you very much, both of you, for all of that. Great. Appreciate it. I will pass it on now. Thank you. Operator: We will take our next question from Scott Schneeberger with Oppenheimer. Your line is open. Scott Schneeberger: Thank you. Good afternoon. I think I will start in Mobile Modular or in rental, your Slide 33, always 1 of attention for pricing. It looks like you have a spread of 39 percent from total portfolio on rent versus trailing 12 months of modules on rent. So still very, very strong on that spread. Could you speak to that and to the spot pricing and maybe differentiate large and small projects in that out? Thanks. Keith E. Pratt: Yes. Scott, I will jump in and take a crack at it. I think you are correct with the observations. there is still a good spread. Between the average revenue per unit on rent and then what we are seeing with shipments over the last 12 months. And that is-- we view that as a good thing for the business, a sort of positive tailwind over time. Couple of things at play, I would say spot pricing, it kind of varies around the country. It varies by type of product. It varies by length of contract. All those things go into the mix. it is a fairly complicated algorithm when you look at understanding pricing at a very granular level. But the way we would characterize pricing that we have been experiencing is overall, fairly stable. There are some pluses and minuses in different categories in different regions, and that is typical in the business. But overall, relatively stable. And then the services piece is really something we have been working to grow over the last few years, and that is giving us more revenue opportunity per unit. We are being in achieving that with the new shipments, and it is gradually working its way into the installed base or rental units. So all those trends are things we have seen for many quarters. And they continue to be healthy and we are very pleased about that. I do not think there is anything unusual regarding mega project or small local markets. There are dynamics around terms, size of project, that can influence how we view the pricing that is appropriate. But those are all normal things we, and I think others, take into consideration when they look at new business. Okay. Thanks. Appreciate that. I am going to crack at TRS. Scott Schneeberger: Oh, I am sorry. Were you saying something? Keith E. Pratt: No. Operator: Go ahead, Scott. Scott Schneeberger: Thanks. Yes. I want to go over and dig into TRS because I think we saw it accelerate now in the high teens year over year. And that is against a tough comp rental revenue growth. So very impressive to see. I think if you could just elaborate on the trends there, the sustainability of the trends. And, yes, a little bit of extra CapEx in that business. there is a lot of sustainability, yes, I think it certainly justifies that CapEx and then some. If you could just speak on that decision making process and how hot that market is for you? Thanks. Philip Hawkins: Yes. I am happy to answer that, Scott. We really see that demand remains strong across several end markets. And there is no immediate sign of slowing. Data centers a main contributor to that growth. It feels like we are still in the early to mid-innings of that data center build out. We ended utilization higher, but equipment levels are still lower than they have been. Over the last several years. So there is opportunity to add CapEx and participate in that growth. We do not have a crystal ball for any of this, but our teams are very familiar in managing these technology cycles. We know the things to watch for and they manage them well. So, we believe we have got good runway, feel good about the place of cycle we are in. And maybe the thing I will just add specific to TRS and data centers is we still do not have a good feel for what the ongoing maintenance requirements will be for electronic test equipment as these things are installed and there is some type of maintenance and refresh process over time. So, nothing there that gives us any concern Yes, good last point, Ronan. Certainly a nice opportunity for you long term. Scott Schneeberger: I will just do 1 more. You have been buying back stock, first quarter, second quarter, at a decent clip. Just curious the rationale of buybacks and consideration for M&A. Obviously, you are doing your geographical build out. With investment, which can impact margins You can kind of bypass that on successful acquisitions. So just kind of curious on strategy of the continued geographic expansion organic versus M&A? And then just a little comment on buybacks. Thanks. Keith E. Pratt: Keith, you want to start with the buybacks and then I will talk about geographic expansion and M&A? Okay. Yes. Scott, it is an important topic. Topic and 1 that we are frequently reviewing, which is cash and capital allocation opportunities in which ones we should fund I think the good news is leverage at 1.65 at the end of June We have a lot of flexibility and we still want to be prudent And you are seeing the focus on organic investment We have good opportunities at Modulars and TRS and we are funding them. And at the same time, to manage utilization very carefully but still in light of market conditions, it is obviously a different story in each line of business. So that is the first comment. We did 1 small tuck in You may recall, we commented on it on the April call that deal was closed back on April 1. We are going to continue to work the pipeline. Philip can elaborate on that. And then we look at the buyback as another tool in the toolkit. We do not telegraph how much and when. But we have not purchased shares both in the first and second quarter. We have purchased a total of 250 thousand shares year to date. And we are in a position to do more. Our authorization which was put in place in September 2024 was for 2 million shares. We still got 1.75 million shares available under that authorization for repurchase. So clearly, another tool in the toolkit, the dividend, we have got a good track record of healthy dividend and an ability to increase it steadily. As the business continues to grow and be profitable. Philip Hawkins: I will just add relative to geographic expansion. We are executing well there. You can see that in the rental momentum that we have. that is 1 of the drivers of that. We do that primarily organically through CapEx, as Keith mentioned, but we are able to utilize smart M&A as an accelerator. The acquisition that we closed this quarter is 1 example of that where we expanded our reach into the Midwest with a small tuck in modular acquisition. So it provides us additional density, a facility that we can leverage to further scale in that part of the country. And we will be able to add value to the existing customer base, by providing Mobile Modular Plus services that were not being offered previously. As well as expanding from that kind of commercial construction customer base to adding classrooms, portable storage, larger commercial complexes, product offerings that they did not have in their toolkit. So we have an active pipeline of those types and other types of opportunities. We work that regularly, and we are feel good about where we are at in that process. Thanks, Scott. Operator: Take our next question from Dan Moore with CJS Securities. Your line is open. Dan Moore: Thank you. Good afternoon, Philip and Keith, for all the color and taking questions. Wanted to just go back to Enviroplex. Curious if any of those delayed sales have now been executed and your prior comments would imply based on what we have seen in H1 that H2, we think, would be up slightly year over year. Just curious of your expectations for sales kind of Q3 and then the remainder of the year there? Keith E. Pratt: Yes. I would say, as I mentioned a moment ago, some of those delays, I think it is a matter of weeks. Others just a few months. But those are in the case of Enviroplex, those are all contracted projects. And usually, a customer has decided to do something in the construction side, they actually want to get it done as quickly as possible. So we and our customers are very aligned. This particular year, I think we will see for Enviroplex, just to make the math work that I outlined earlier, if they hit a revenue number somewhere in the neighborhood of mid 40s, they have a lot of business to get completed in the second half. I do not want to really get into handicapping how much in Q3 versus Q4. Several of the things that were a little late to finish in the second quarter, it is a matter of moving from June to July. But there is other projects that will take a little longer to get completed. So I would say Enviroplex is likely to have a very strong second half. Whether some of those projects are completed in Q3 versus Q4, I want to be a little careful. About pinning a sign on that, but most likely both quarters will show healthy Enviroplex sales. Very helpful. Dan Moore: And then I am curious just from a sort of-- we have talked about large customers or smaller in-- or smaller geographies. But just looking from a geographic perspective, any regions that are either picking up faster or conversely slowing down a little bit? And maybe just a little bit more color about the success that you are having with your geographic or regional penetration strategy? Philip Hawkins: I will take that, Dan. just where I would start is, obviously, we have more strength where we are entering the market. New to the market, did not have fleet. We are able to participate in all the opportunities there. Not depending on market growth. We are able to grow even though the overall construction market may be contracting a little bit from a square footage standpoint. So those geographies that we talked about where we are small and growing, Pacific Northwest, Midwest, Northeast, would be examples where there is relative strength for us. Not an indication of whether those markets are performing better overall. And then the other dynamic you have is, I mean, our legacy markets just where we have been longer, we have larger fleets. And so those places, even though the markets may be as healthy, as the new geographic markets. We just have much more inventory to deploy. And we are more impacted by the slowdown in those smaller local construction projects. But there is no markets that I would call out where we are extremely strong in 1 region of the country versus another. The exception would be obviously wherever you see these large data centers Mega projects, those tend to be in the Midwest, South, but we see those all over the country. So where those are happening, there is obviously pockets of strength. But in general, I would not call anything out geographically unique beyond our own internal geographic expansion initiative. Really helpful. Dan Moore: Maybe just 1 more. Just you touched on it in the prepared remarks, but give us a little bit more color update on the traction you are seeing, both Mobile Modular Plus as well as site related services? And how do we think about kind of incremental growth you can generate from both of those relative to the market over the next 2, 3, 5 years? Philip Hawkins: I think we are happy with the penetration that we are getting there. We talked about the quarter over quarter growth rate, particularly in Mobile Modular Plus still being strong in our cumulative growth rates in both those initiatives continue to be in the continue to be strong. So, we feel good about our ability to continue to penetrate with the existing offerings. So increasing the amount of the current product offerings, furniture, holding tanks, those kinds of things as the fleet churns, have opportunity to sell in the new orders where the old fleet that is on rent did not have that opportunity. So 1 level is increased penetration. At the same time, we are adding services and offerings to that Mobile Modular Plus lineup that give us more ways to add value to the customer. And increase revenue per order. So, more recently, we have seen things like cell phone service, janitorial services, air care, filter replacement type programs. We are adding those capabilities. So, we see lots of opportunities, still opportunity to move the needle on penetration, and still opportunity to move the needle on services that we are offering And then if you think back to what Keith, of course-- what Keith talked about just on pricing churn over time, think about that services happening over a similar timeframe, right, multi year as the fleet churns and things that have been out on rent for 3, 4, or 5 years come back, and we are able to get those back out on rent with a new level of service offerings. Operator: We will take our next question from Steven Ramsey with Thompson Research Group. Your line is open. Steven Ramsey: Hi, good evening. I wanted to hear a bit more on modular shipments exceeding returns. Definitely good to see that. Maybe talk to how much of that is less units coming in versus more going out? Do you feel like the returns headwind is behind you or at least sloping in the right direction? Philip Hawkins: Yes. I do not think it takes both sides of the equation, right? The shipments need to be growing and returns are bigger. So I think we have seen a little bit of both. Historically, talked about it, if you think back 3 ish years ago, peak construction markets, kind of lines up with our average term. We feel like that shift is in the process of happening and that last 4 months of consistently seeing shipments exceed returns is a nice indicator for us. So then you can have a larger return from a single customer that might throw that off in a month. Or a quarter. But we do feel like kind of the worst is behind us in terms of the lower shipment levels combined with higher return levels and that we have got a trend here that is going to give us some solid momentum going forward. Steven Ramsey: Okay. that is great. On TRS, been talked about how good the results were. And utilization hitting very high levels and it looks like raising CapEx. You feel like the high utilization constrained the results that you potentially could have put up and then this larger equipment base is it contributing meaningfully in the second half? Or is this something that it rolls into the second half and helps 2027? Keith E. Pratt: Yes. All good comments Stephen. A couple of things. First of all, I do not think we were constrained in the second quarter. We have got a really good team. They are just very nimble in how they react to market opportunities. They have been doing a remarkable job here for many quarters of capitalizing on our on a healthy demand environment and at the same time managing the fleet assets very effectively from a return on capital point of view. So that is the first comment I would make. And given the healthy demand, as Philip mentioned earlier, we think the outlook is positive for this business. We are happy to add more capital. It is also a business that when we see shifts in demand and we had this 2 or 3 years ago when circumstances were very different, we had the ability to very thoughtfully reduce the size of the fleet and turn it into cash. And again, if you look at the history of the last 12 quarters, you can see this business has that ability to reduce fleet size and turn it into cash fairly quickly and we have done it before. But right now, we are in a very different part of the cycle. there is opportunity. We are managing the fleet extremely well from a utilization point of view. And we are absolutely at that level in many product categories where it makes sense to invest more capital and keep in pace with the good growth and demand. And that should be a positive certainly for the rest of the year and hopefully beyond. But that is the way I talk about it. This is a high velocity business and we have the team and the systems to manage that business very effectively. Steven Ramsey: Okay. that is all great. And then 1 last 1 for me sticking to TRS. Can you talk about pricing and how and if that is a positive for 2026 and maybe just put into context the pricing environment of this good cycle versus prior good cycles? Philip Hawkins: I will take that 1, Stephen. I think pricing in the TRS world is very disciplined. it is typically a pretty tight range around percent of list. The possible lift that can come is in a high demand environment like this. Or manufactured or increasing list prices that could give opportunities for a little bit of pricing improvement as list prices on equipment goes up. But we compete on we have to be in the zone, but this is not as dynamic a pricing environment as you see in our other businesses. Keith, anything else you would like to add there? Keith E. Pratt: No, that is fine. Yes. I will just point out, Stephen, you have probably seen, we have got what we call the RIC factor. that is the defined term we provided across each of our rental segments. That rate factor was up nicely at TRS RenTelco, 4.52 compared to 4.22 a year ago. However, the primary reason for the increase is the mix of business that we are doing. it is essentially shifting a little bit more towards communications side. Those communications products in general have a shorter useful life. So, when we look at the cash we have to receive, it is a higher amount of cash per month given our view that the equipment will have a shorter useful life compared to some of the general-- general purpose products that we have. So the headline I would give you is our metric looks better it is largely mix driven. And as Philip said, the pricing is generally pretty disciplined and stable. Steven Ramsey: Excellent. Thank you both. Thanks, Steven. Operator: We will move next to Marc Riddick with Sidoti. Your line is open. Marc Riddick: Hi, good evening. So Keith, I really appreciated the tail end of the commentary there around the mix that sort of delves into sort of where I was going to initially go with 1 of my questions. But the TRS utilization commentary it certainly seems to have indicated it was going through the quarter sequentially, I guess, and monthly, what have you. Is there sort of a general thought as to comfort levels as to not necessarily a feeling, but maybe sort of talk a little bit about comfort levels of utilization within TRS? And then I have a follow-up. Keith E. Pratt: Yes. Again, we try to manage that very carefully, balancing having equipment available for customers for the next order versus high utilization and strong return on invested capital. Those are things we are always calibrating in the business. I think we are comfortable where we are, but we are absolutely at that point where it makes sense to add more capital in certain product categories where the demand is strong. And our view is that strength will continue for many months. So that is where we are at. And again, we have got a good team. They look at it very closely. This business has a lot of SKUs. So there are a lot of different items that we hold in inventory, and we are constantly evaluating should we add to 1 SKU or should we sell off at another? that is all part and parcel of being in this business. And our team does a really good job. Great. Marc Riddick: And then I know there is been a lot of and I really appreciate all the color that you have already provided. Maybe 1 of the things we did not touch on is on education. Maybe you can sort of give us a bit of an update as to what you are seeing there as to activity levels and progress maybe relative to historicals as well as how you are feeling about funding environments in key markets there? Philip Hawkins: Thanks, Marc. Appreciate the question. At the national level, education drivers, I would characterize as neutral. You have got decreasing public school enrollment. That we have been talking about being offset by increasing modernization opportunities and our geographic expansion efforts, right, we are entering into new markets where we have classroom opportunities When we look at 2026, our education bookings were not as strong as they were last year. But we continue to view education as a attractive long term vertical. We like our market position there. It just is not likely to be the growth driver for us in the near term, right? that is all coming from the commercial side of the business, and that is more than offsetting what we are seeing on the education side. Okay, great. And then, I know you touched a little on this as to the acquisition, the smaller acquisition earlier in the year, maybe touch a bit on just general views as to maybe what you are seeing out there currently, valuation levels and what the how the pipeline looks as far as levels of attractiveness at point? I can take this. I think there is plenty of opportunities out there. What we always talk about is the 3 things that need to align. You need a willing seller, you need a high quality assets and business, and you need the right valuation. And the 3 of those things do not line up in our world incredibly often, and you see that in our history. But we have an active pipeline, opportunities of all shapes and sizes that we are regularly working, meeting with, we believe we are a buyer of choice and attractive acquirer. But again, you need all those 3 things to line up. We are not in a hurry. We are glad to grow organically. And proven we can do that. In all of our markets. And where we find the right opportunity, it is a nice accelerator for us. So nothing's changed there. Good pipeline, good process, we have got the right playbooks around that. But we are not depending on it. Great. Thank you very much. Operator: Thank you. There appears to be no other questions. This concludes the Q and A portion of today's call. I would now like to turn the floor over to Mr. Hawkins for closing remarks. Philip Hawkins: I would like to thank everyone for joining us on the call today. And for your continued interest in our company. We look forward to speaking with you again in late October to review our third quarter results. Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect. Before you buy stock in McGrath RentCorp, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and McGrath RentCorp wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $397,405!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,344,091!* That performance is why people listen. With a track record of beating the S&P 500 by 4x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of August 7, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool recommends McGrath RentCorp. The Motley Fool has a disclosure policy. McGrath RentCorp (MGRC) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Interested in McGrath RentCorp? Here are five stocks we like better. Second-quarter revenue and earnings declined: Total revenue fell 6% year over year to $221 million and adjusted EBITDA dropped 4% to $83 million, mainly due to lower equipment sales and delayed project completions. Rental operations revenue still grew 6%. Mobile Modular showed signs of recovery, while TRS-RenTelco led growth: Mobile Modular bookings rose 11% and utilization improved, suggesting a turnaround after a prolonged decline. TRS-RenTelco revenue increased 17% and adjusted EBITDA climbed 29%, supported by data center, aerospace, defense and semiconductor demand. Full-year guidance was maintained as capital spending increased: McGrath kept midpoint expectations for revenue of $955 million–$985 million and adjusted EBITDA of $363 million–$375 million, while raising gross rental equipment capital expenditure plans to $200 million–$220 million. Portable storage remains weak and Enviroplex sales are being pushed into later periods due to project delays. McGrath RentCorp (NASDAQ:MGRC) reported second-quarter results that reflected continued growth in rental operations, led by its Mobile Modular and TRS-RenTelco businesses, while lower equipment sales and delayed project completions weighed on total revenue and earnings. Total revenue declined 6% year over year to $221 million, while adjusted EBITDA fell 4% to $83 million. Rental operations revenue increased 6%, but the gains were offset by lower new-equipment sales at Enviroplex and Mobile Modular, Chief Executive Officer Phil Hawkins said during the company’s July 29 earnings call. → This Tiny AI Supplier Could Be More Important Than the Chipmakers “We delivered rental operations revenue growth in a mixed demand environment,” Hawkins said, adding that the company sees momentum heading into the second half of 2026. Mobile Modular revenue declined 4% to $150 million and adjusted EBITDA decreased 4% to $51 million in the quarter. However, rental revenue rose 2%, supported by commercial customers and an 8% increase in rental-related services revenue. → Refiner Stocks Are Near Record Highs—Can Iran-Driven Margins Keep Them There? Bookings increased 11% from a year earlier, while average fleet utilization improved sequentially to 70.1% from 70.0% in the first quarter. Utilization ended the quarter at 70.6%, as shipments exceeded returns. The company said units on rent increased for four consecutive months, ending the quarter above the level at the start of the year. Hawkins characterized the development as a meaningful shift after a lengthy period of declining utilization, though management cautioned that improvement may not occur in a straight line each quarter. → Innovative ETF Strategies That Are Paying Off This Summer “We do believe we turned the corner on a trend on the modular side and have strong momentum entering the second half of the year,” Hawkins said. Management attributed the improvement to a combination of larger commercial project wins and the company’s geographic expansion efforts. It cited the Pacific Northwest, Midwest and Northeast as areas where McGrath is gaining traction after adding sales coverage and deploying fleet capital. Monthly revenue per unit on rent increased 7% to $902. For units shipped during the past 12 months, average monthly revenue per unit was up 7% to $1,252, which Chief Financial Officer Keith Pratt said provides a pricing tailwind as the fleet turns over. Mobile Modular Plus revenue rose to $10.5 million from $9.2 million a year earlier. Site-related services revenue was $6 million, down from $6.5 million in the prior-year quarter but ahead of 2025 levels on a year-to-date basis. Rental margins at Mobile Modular declined to 55% from 58%, as inventory center costs rose $2.1 million to prepare equipment for anticipated stronger demand and shipment activity in the second half. Mobile Modular sales revenue decreased $9.3 million to $31.2 million, largely because several new sales projects shifted into the second half of the year. Enviroplex revenue fell to $4.6 million from $19.9 million in the prior-year period, while adjusted EBITDA moved to a $0.5 million loss from a $4.3 million profit. Pratt said the Enviroplex decline was primarily a timing issue involving contracted projects, including delays related to site readiness, permits, foundation work and utility connections. He said the company expects Enviroplex’s full-year performance to be closer to its 2024 revenue of $46 million than its 2025 revenue of $57 million. “These aren’t projects canceling and falling out of the pipeline, just completion date shifting from when we originally expected it,” Hawkins said. He added that management sees underlying new modular sales demand as stable and consistent with a year ago. TRS-RenTelco delivered the company’s strongest segment results. Total revenue increased 17% to $43 million, adjusted EBITDA rose 29% to $25 million, and rental revenue climbed 17% to $32 million. Demand remained healthy in data centers, aerospace and defense, and semiconductor-related end markets. Average utilization increased to 68.1% from 64.8% a year earlier and ended the quarter at 68.9%, the segment’s highest level since the first quarter of 2021. Rental margins improved to 48% from 44%, while sales revenue increased 13% to $8.7 million and gross margin rose to 66% from 47%. Hawkins said data center activity remains a meaningful contributor to TRS-RenTelco’s growth, with the company viewing the current build-out as still in its early-to-middle stages. The company increased its rental equipment capital expenditure outlook in part to support additional investment in TRS. By contrast, portable storage rental revenue was flat at $17 million amid weak small local commercial construction markets. Total portable-storage revenue rose 1% to $24 million, but adjusted EBITDA fell 23% to $8 million. Average utilization declined to 58.3% from 61.1%, while rental margins decreased to 80% from 83%. Hawkins said lower industry utilization and heightened competition remain the primary challenges in portable storage. The company does not expect a meaningful recovery in the smaller nonresidential construction market this year. McGrath tightened its full-year ranges while maintaining the midpoints of its prior revenue and adjusted EBITDA outlook. The company now expects: Total revenue of $955 million to $985 million. Adjusted EBITDA of $363 million to $375 million. Gross rental equipment capital expenditures of $200 million to $220 million. Pratt said stronger-than-expected TRS-RenTelco performance is expected to offset weaker portable-storage results, while Enviroplex is still projected to perform similarly to 2024. For the first half, McGrath generated $106 million in operating cash flow, compared with $110 million a year earlier. Rental equipment purchases rose to $124 million from $50 million, reflecting investments in modular expansion and TRS demand. The company also paid $25 million in dividends and repurchased $27 million of stock during the period. At quarter-end, net borrowings totaled $590 million and funded debt was 1.65 times trailing 12-month adjusted EBITDA. Management said its balance sheet provides flexibility to fund organic expansion, dividends, acquisitions and share repurchases. McGrath RentCorp, through its subsidiaries, provides rental, sales, and servicing of equipment for commercial, industrial, environmental, and residential markets. The company operates primarily through two segments—mobile storage and water management—offering flexible solutions for customers requiring on-site storage, water transport, treatment, and dewatering services. In its mobile storage segment, McGrath RentCorp supplies portable storage containers and modular office units to sectors including construction, retail, government, and disaster restoration. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "McGrath RentCorp Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for July 2026.

This article first appeared on GuruFocus. Total Revenue: $221 million, a decrease of 6% year-over-year. Adjusted EBITDA: $83 million, a decrease of 4% year-over-year. Mobile Modular Rental Revenue: Increased 2% year-over-year. Mobile Modular Rental Margin: 55%, down from 58% a year ago. Mobile Modular Average Fleet Utilization: 70.1%, compared to 73.7% a year ago. Mobile Modular Monthly Revenue Per Unit on Rent: Increased 7% to $902. Mobile Modular Plus Revenue: $10.5 million, up 15% year-over-year. Portable Storage Rental Revenue: $17 million, flat compared to last year. Portable Storage Rental Margin: 80%, down from 83% a year earlier. Portable Storage Average Utilization: 58.3%, compared to 61.1% a year ago. TRS-RenTelco Total Revenue: $43 million, up 17% year-over-year. TRS-RenTelco Rental Revenue: $32 million, an increase of 17%. TRS-RenTelco Rental Margin: 48%, improved from 44% a year ago. TRS-RenTelco Average Utilization: 68.1%, up from 64.8% a year ago. Enviroplex Total Sales Revenue: $4.6 million, a decrease from $19.9 million in the prior year. Selling and Administrative Expenses: $56.4 million, an increase of $2.9 million. Interest Expense: $7.1 million, a decrease of $0.7 million. Effective Tax Rate: 27%, compared to 27.3% a year earlier. Net Cash Provided by Operating Activities (Year-to-Date): $106 million, compared to $110 million last year. Rental Equipment Purchases (Year-to-Date): $124 million, compared to $50 million last year. Shareholder Dividends Paid (Year-to-Date): $25 million. Share Repurchases Completed (Year-to-Date): $27 million. Ratio of Funded Debt to Adjusted EBITDA: 1.65:1. 2026 Total Revenue Outlook: Between $955 million and $985 million. 2026 Adjusted EBITDA Outlook: Between $363 million and $375 million. 2026 Gross Rental Equipment CapEx Outlook: Between $200 million and $220 million. Warning! GuruFocus has detected 3 Warning Sign with SPOK. Is MGRC fairly valued? Test your thesis with our free DCF calculator. Release Date: July 29, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. McGrath RentCorp (NASDAQ:MGRC) reported a 6% year-over-year increase in rental operations revenue, driven by strong momentum in Mobile Modular and TRS-RenTelco. Mobile Modular saw a positive inflection with utilization improving sequentially for the first time since 2022, and units on rent increasing for four consecutive months. TRS-RenTelco delivered another strong quarter with rental revenues up 17%, driven by healthy demand from data centers, aerospace and defense, and semiconductors. The company's strategic growth initiatives, including geographic expansion and services like Mobile Modular Plus (up 15% year-over-year), are providing non-market-dependent growth opportunities. McGrath RentCorp (NASDAQ:MGRC) maintains a strong balance sheet with a low leverage ratio of 1.65x, providing flexibility for organic growth, dividends, M&A, and share repurchases. Total company revenues decreased 6% and adjusted EBITDA decreased 4% year-over-year, impacted by lower new equipment sales at Enviroplex and Mobile Modular. Portable storage continues to face challenging demand conditions in local commercial construction markets, with utilization dropping to 58.3% from 61.1% a year ago. Mobile Modular rental margins compressed to 55% from 58% a year ago due to higher inventory center costs as the company invested to prepare equipment for stronger demand. Several large sales projects at Enviroplex and Mobile Modular were pushed to the second half of the year due to site readiness issues, creating uncertainty in quarterly revenue timing. Education bookings were not as strong as last year, and the education vertical is not expected to be a near-term growth driver for the company. Here are the key highlights from the McGrath RentCorp (NASDAQ:MGRC) Q2 2026 earnings call. Q: Can you provide color on the drivers behind the modular shipments exceeding returns and whether this marks the long-awaited inflection in utilization? A: (Phil Hawkins, CEO) The sequential utilization improvement in modulars is the first time in four years, driven by more mega project wins and our geographic expansion initiatives. This is giving a nice lift to commercial utilization and partially offsetting weakness in education. We feel good that the trend has changed and we have strong momentum entering the second half of the year, though we may not see a move up every single quarter. Q: What is driving the continued weakness in portable storage, and what leading indicators could suggest improvement? A: (Phil Hawkins, CEO) The consistent themes are the smaller local market project dynamic combined with lower industry utilization and a highly competitive market. There are no regional dynamics to call out. We would need to see a meaningful move in small local non-residential construction projects before we see a recovery, which we are not expecting this year. Q: Can you elaborate on the strong trends at TRS-RenTelco, the sustainability of that growth, and the decision to increase CapEx there? A: (Phil Hawkins, CEO) Demand remains strong across several end markets, with data centers being a meaningful contributor. We feel we are still in the early to mid-innings of the data center build-out. While utilization is higher, equipment levels are still lower than in recent years, providing room for growth. (Keith Pratt, CFO) We are happy to add more capital given the healthy demand outlook. This business also has the ability to reduce fleet size and turn it into cash quickly if demand shifts, as it has done in the past. Q: What caused the decline in sales revenue, and what gives you confidence that these are timing shifts rather than cancellations? A: (Keith Pratt, CFO) The decline was driven by several new sales projects at Enviroplex and Mobile Modular shifting to the second half due to site readiness issues like permits or utility hookups. These are all projects under contract that we will complete. (Phil Hawkins, CEO) These are not cancellations; just completion dates shifting. There is nothing in the underlying market demand that we are worried about. Q: Can you discuss the pricing environment in Mobile Modular, particularly the spread between the total portfolio and new shipments? A: (Keith Pratt, CFO) The spread between the average revenue per unit on rent and what we are seeing with new shipments remains a positive tailwind. Overall spot pricing is fairly stable, with some pluses and minuses in different categories and regions. The growth in services is also providing more revenue opportunity per unit, which is gradually working its way into the installed base. Q: What is the strategy behind the continued geographic expansion, and how do you balance organic growth with M&A and share buybacks? A: (Phil Hawkins, CEO) We are executing well on organic geographic expansion, which is a key driver of rental momentum. We use smart M&A as an accelerator, like the small tuck-in acquisition in the Midwest. (Keith Pratt, CFO) With leverage at 1.65x, we have flexibility. Our focus is on funding good organic opportunities, while also working an active M&A pipeline. The buyback is another tool; we have purchased 250,000 shares year-to-date and have 1.75 million shares remaining under our authorization. Q: Can you provide an update on the traction you are seeing with Mobile Modular Plus and site-related services? A: (Phil Hawkins, CEO) We are happy with the penetration. Mobile Modular Plus revenue grew 15% year-over-year. As the fleet churns, we have opportunities to sell services like furniture and holding tanks on new orders. We are also adding new offerings like cell phone service and janitorial services. This is a multi-year opportunity as the fleet turns over. Q: What is your view on the education vertical and its outlook for the near term? A: (Phil Hawkins, CEO) At the national level, education drivers are neutral. Decreasing public school enrollment is being offset by modernization opportunities and our geographic expansion. For 2026, education bookings were not as strong as last year. We view it as an attractive long-term vertical, but it is not likely to be a near-term growth driver, with growth coming from the commercial side. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Modular rental operations achieved a critical inflection point as utilization improved sequentially for the first time since 2022, driven by mega-project wins and geographic expansion. Total revenue declined 6% primarily due to project timing shifts at Enviroplex and Mobile Modular, where several large sales moved into the second half of the year. TRS RenTelco delivered 17% rental revenue growth, capitalizing on robust demand cycles in data centers, aerospace, and semiconductor end markets. Portable storage remains a headwind as challenging local commercial construction markets and high industry-wide inventory levels create a competitive pricing environment. Management is successfully offsetting non-residential construction softness through strategic geographic expansion into the Pacific Northwest, Midwest, and Northeast. The company is leveraging its scale to capture 'mega-projects' like data centers, which allow for cross-selling modular buildings, kitchens, and electronic test equipment. Operational margins were temporarily compressed by a $2.1 million investment in inventory center costs to prepare fleet for expected higher shipment levels in late 2026. Full-year guidance midpoints remain unchanged, assuming that TRS outperformance and Modular stability will offset continued weakness in portable storage. Enviroplex is expected to see a significant second-half revenue weight as contracted projects delayed by site readiness and permitting issues reach completion. Capital expenditure guidance was increased to $200-$220 million to support incremental fleet investment in the high-growth TRS segment. Management anticipates a multi-year tailwind from 'pricing churn' as older fleet units return and are redeployed at current market rates with value-added services. The growth strategy remains focused on organic geographic expansion, supplemented by opportunistic M&A that meets strict valuation and asset quality criteria. Education sector bookings have softened compared to the prior year, reflecting a national trend of decreasing public school enrollment. Portable storage EBITDA declined 23% due to higher fleet preparation costs and margin pressure from a highly competitive local market. The TRS business model allows for rapid cash generation through fleet reduction if technology cycles shift, though current conditions favor aggressive investment. A small modular tuck-in acquisition in the Midwest during Q2 serves as a template for accelerating geographic density and service penetration. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management confirmed that shipments exceeded returns for four consecutive months, marking a shift in the multi-year trend of fleet contraction. The recovery is driven by commercial mega-projects rather than a broad recovery in the small-scale non-residential construction market. The decline was attributed to timing rather than cancellations, with site readiness issues like permitting and utility hookups pushing completions into H2. Enviroplex is expected to return to 2024 revenue levels after an exceptionally strong 2025, with most remaining 2026 revenue weighted to Q3 and Q4. Management believes the data center build-out is in the 'early to mid-innings,' providing a long runway for electronic test equipment rentals. A shift toward communications products with shorter useful lives has increased the segment's 'rate factor' metric due to higher monthly rental requirements. With a low leverage ratio of 1.65x, the company is using share repurchases as a 'tool in the toolkit' while maintaining capacity for organic growth and M&A. Management emphasized they are 'not in a hurry' for M&A, requiring a rare alignment of willing sellers, high-quality assets, and right valuations.

McGrath (MGRC) came out with quarterly earnings of $1.37 per share, missing the Zacks Consensus Estimate of $1.46 per share. This compares to earnings of $1.46 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of -6.16%. A quarter ago, it was expected that this business-to-business rental company would post earnings of $1.13 per share when it actually produced earnings of $1.1, delivering a surprise of -2.65%. Over the last four quarters, the company has surpassed consensus EPS estimates just once. McGrath, which belongs to the Zacks Financial - Leasing Companies industry, posted revenues of $221.11 million for the quarter ended June 2026, missing the Zacks Consensus Estimate by 6.86%. This compares to year-ago revenues of $235.62 million. The company has topped consensus revenue estimates two times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. McGrath shares have added about 14.3% since the beginning of the year versus the S&P 500's gain of 8.5%. While McGrath has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for McGrath was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $1.82 on $271.03 million in revenues for the coming quarter and $6.35 on $970.46 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Financial - Leasing Companies is currently in the top 40% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Upbound Group (UPBD), another stock in the same industry, has yet to report results for the quarter ended June 2026. The results are expected to be released on July 30. This company that leases furniture and appliances with an option to buy is expected to post quarterly earnings of $1.07 per share in its upcoming report, which represents a year-over-year change of -4.5%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Upbound Group's revenues are expected to be $1.15 billion, down 0.2% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report McGrath RentCorp (MGRC) : Free Stock Analysis Report Upbound Group, Inc. (UPBD) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

LIVERMORE, Calif., July 29, 2026--(BUSINESS WIRE)--McGrath RentCorp ("McGrath" or the "Company") (Nasdaq: MGRC), a leading business-to-business rental company in North America, today announced total revenues for the quarter ended June 30, 2026 of $221.1 million, a decrease of 6% compared to the second quarter of 2025. The Company reported net income of $33.7 million, or $1.37 per diluted share, for the second quarter of 2026, compared to net income of $36.0 million, or $1.46 per diluted share, for the second quarter of 2025. The decreases in net income and earnings per diluted share for the quarter were primarily attributed to lower gross profit on sales revenues when compared to the second quarter of 2025. SECOND QUARTER 2026 YEAR-OVER-YEAR COMPANY HIGHLIGHTS: Rental operations revenues increased 6% to $172.5 million. Sales revenues decreased 34% to $46.4 million. Total revenues decreased 6% to $221.1 million. Other income, net increased $1.8 million as a result of the sale of a corporate property. Income from operations decreased 7% to $53.3 million. Adjusted EBITDA1 decreased 4% to $82.8 million. Dividend rate of $0.495 per share for the second quarter 2026. On an annualized basis, this dividend represents a 1.7% yield on the July 28, 2026 close price of $119.98 per share. Phil Hawkins, President and CEO of McGrath, made the following comments: "Our strong rental operations revenues were the highlight of the second quarter and we were pleased to see momentum building in our two largest rental businesses. Both Mobile Modular and TRS grew rental revenue and improved utilization sequentially while Portable Storage rental revenues were stable. Sales revenues for the quarter were lower than a year ago, due to lower sales at Enviroplex and Mobile Modular, as delays caused several new sales projects to shift to the second half of the year. Modular rental revenues increased 2% compared to last year, with continued growth from our commercial customer base. We experienced positive business momentum during the quarter, particularly with large commercial projects and progress with our regional expansion efforts. Shipments exceeded returns for each month of the quarter, and average utilization improved slightly from the first to second quarter. Portable Storage rental revenues were flat as commercial construction project activity remained soft. Higher costs for equipment preparation, trucking and sales coverage continued to pressure margins in the quarter. TRS-RenTelco had an impressive quarter, as strong market conditions supported 17% rental revenue growth. Demand was robust throughout the quarter, and the business benefited from projects supporting buildout of new data centers. Overall, we are encouraged by our progress. Modular utilization improvement and execution on our strategic growth initiatives in the quarter set us up well for the second half of the year. While there are still some challenges in the macro environment, we remain focused on the growth levers within our control." DIVISION HIGHLIGHTS: All comparisons presented below are for the quarter ended June 30, 2026 to the quarter ended June 30, 2025 unless otherwise indicated. MOBILE MODULAR For the second quarter of 2026, the Company’s Mobile Modular division reported Adjusted EBITDA of $50.7 million, a decrease of $2.3 million, or 4%, when compared to the same quarter in 2025. Rental revenues increased 2% to $81.9 million, depreciation expense increased 9% to $11.7 million and other direct costs increased 9% to $26.1 million, which resulted in a decrease in gross profit on rental revenues of 4% to $45.4 million. Rental related services revenues increased 8% to $34.8 million, primarily attributable to higher delivery and installation revenues, with associated gross profit increasing 8% to $12.7 million. Sales revenues decreased 23% to $31.2 million, primarily due to lower new equipment sales. Lower sales revenues partly offset by higher gross margin on sales of 36% in 2026, compared to 32% in 2025, resulted in a 14% decrease in gross profit on sales revenues to $11.1 million. Selling and administrative expenses increased 2% to $37.4 million, when compared to the prior year. PORTABLE STORAGE For the second quarter of 2026, the Company’s Portable Storage division reported Adjusted EBITDA of $7.6 million, a decrease of $2.2 million, or 23%, when compared to the same quarter in 2025. Rental revenues were comparable to 2025 at $16.9 million, depreciation expense increased 6% to $1.1 million, and other direct costs increased 18% to $2.3 million, which resulted in a decrease in gross profit on rental revenues of 4% to $13.5 million. Rental related services revenues increased 3% to $4.5 million, primarily attributable to higher delivery and return delivery activities. Gross margin on rental related services was negative 18% compared to 2% in 2025, primarily due to higher trucking related costs, resulting in a gross loss on rental related services revenues of $0.8 million. Sales revenues increased 8% to $1.9 million. Gross margin on sales was comparable to 2025 at 39%, resulting in a $0.1 million increase in gross profit on sales revenues to $0.7 million. Selling and administrative expenses increased 12% to $8.5 million, when compared to the prior year. TRS-RENTELCO For the second quarter of 2026, the Company’s TRS-RenTelco division reported Adjusted EBITDA of $25.0 million, an increase of 29% when compared to the same quarter in 2025. Rental revenues increased 17% to $31.8 million, depreciation expense increased 8% and other direct costs increased 10%, resulting in a 29% increase in gross profit on rental revenues to $15.3 million. Sales revenues increased 13% to $8.7 million and gross profit on sales revenues increased 59% to $5.8 million, primarily attributed to higher sales margins of 66% in 2026 compared to 47% in 2025. Selling and administrative expenses increased 13% to $8.3 million, when compared to the prior year. FINANCIAL OUTLOOK: Based upon the Company's year-to-date results and current outlook for the remainder of the year, the Company is updating its financial outlook. For the full-year 2026, the Company currently expects: ABOUT MCGRATH: McGrath RentCorp (Nasdaq: MGRC) is a leading business-to-business rental company in North America with a strong record of profitable business growth. Founded in 1979, McGrath’s operations are centered on modular solutions through its Mobile Modular and Mobile Modular Portable Storage businesses. In addition, its TRS-RenTelco business offers electronic test equipment rental solutions. The Company’s rental product offerings and services are part of the circular supply economy, helping customers work more efficiently, and sustainably manage their environmental footprint. With over 40 years of experience, McGrath’s success is driven by a focus on exceptional customer experiences. This focus has underpinned the Company’s long-term financial success and supported 35 consecutive years of annual dividend increases to shareholders, a rare distinction among publicly listed companies. McGrath is headquartered in Livermore, California. Additional information about McGrath and its businesses is available at mgrc.com and investors.mgrc.com. You should read this press release in conjunction with the financial statements and notes thereto included in the Company’s latest Forms 10-K, 10-Q and other SEC filings. You can visit the Company’s website at www.mgrc.com to access information on McGrath RentCorp, including the latest Forms 10-K, 10-Q and other SEC filings. CONFERENCE CALL NOTE: As previously announced in its press release of June 25, 2026, McGrath RentCorp will host a conference call at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) on July 29, 2026 to discuss the second quarter 2026 results. To participate in the teleconference, dial 1-800-274-8461 (in the U.S.), or 1-203-518-9814 (outside the U.S.), or to listen only, access the simultaneous webcast at the investor relations section of the Company’s website at https://investors.mgrc.com/. A replay will be available for 7 days following the call by dialing 1-800-839-5203 (in the U.S.), or 1-402-220-2695 (outside the U.S.). In addition, a live audio webcast and replay of the call may be found in the investor relations section of the Company’s website at https://investors.mgrc.com/events-and-presentations. FORWARD-LOOKING STATEMENTS: This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, regarding McGrath RentCorp’s expectations, strategies, prospects or targets are forward-looking statements. These forward-looking statements also can be identified by the use of forward-looking terminology such as "anticipates," "believes," "continues," "could," "estimates," "expects," "intends," "may," "plan," "predict," "project," or "will," or the negative of these terms or other comparable terminology. In particular, the discussion under the heading "Financial Outlook" and Mr. Hawkins' comments about being encouraged by the Company's progress, that the Company is set up well for the second half of the year and that the Company remains focused on the growth levers within its business, are forward looking. These forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties that could cause our actual results to differ materially from those projected including: our expectations around continued business momentum entering the second half of 2026; the continued impact of tariff actions and macroeconomic factors, including fiscal policy uncertainty, government budgetary constraints, other political, geopolitical or regulatory developments; health of the education and commercial markets in our modular building division; competition within the modular business; the activity levels in the semiconductor and general purpose and communications test equipment markets at TRS-RenTelco; the activity levels in commercial construction projects and impact on Portable Storage segment; continued execution of our strategic performance improvement initiatives; our ability to successfully increase prices to offset cost increases; our ability to effectively manage our rental assets; and our ability to retain and attract talent and uncertainty associated with the Chief Executive Officer transition; as well as the other factors disclosed under "Risk Factors" in the Company’s 2025 Form 10-K and other SEC filings. Forward-looking statements are made only as of the date hereof and are based on management’s reasonable assumptions, however these assumptions can be wrong or affected by known or unknown risks and uncertainties. No forward-looking statement can be guaranteed, and subsequent facts or circumstances may contradict, obviate, undermine or otherwise fail to support or substantiate such statements. Except as otherwise required by law, we assume no obligation to update any of the forward-looking statements contained in this press release. Reconciliation of Adjusted EBITDA to the most directly comparable GAAP measures To supplement the Company’s financial data presented on a basis consistent with accounting principles generally accepted in the United States of America ("GAAP"), the Company presents "Adjusted EBITDA", which is defined by the Company as net income before interest expense, provision for income taxes, depreciation, amortization, non-cash impairment costs, share-based compensation, transaction costs, gains on property sales and non-operating transactions. The Company presents Adjusted EBITDA as a financial measure as management believes it provides useful information to investors regarding the Company’s liquidity and financial condition and because management, as well as the Company’s lenders, use this measure in evaluating the performance of the Company. Management uses Adjusted EBITDA as a supplement to GAAP measures to further evaluate period-to-period operating performance, compliance with financial covenants in the Company’s revolving lines of credit and senior notes and the Company’s ability to meet future capital expenditure and working capital requirements. Management believes the exclusion of non-cash charges and non-recurring transactions, including share-based compensation, transaction costs and gains on property sales is useful in measuring the Company’s cash available for operations and performance of the Company. Because management finds Adjusted EBITDA useful, the Company believes its investors will also find Adjusted EBITDA useful in evaluating the Company’s performance. Adjusted EBITDA should not be considered in isolation or as a substitute for net income, cash flows, or other consolidated income or cash flow data prepared in accordance with GAAP or as a measure of the Company’s profitability or liquidity. Adjusted EBITDA is not in accordance with or an alternative for GAAP and may be different from non−GAAP measures used by other companies. Unlike EBITDA, which may be used by other companies or investors, Adjusted EBITDA does not include share-based compensation charges, transaction costs, gains on property sales and non-operating transactions. The Company believes that Adjusted EBITDA is of limited use in that it does not reflect all of the amounts associated with the Company’s results of operations as determined in accordance with GAAP and does not accurately reflect real cash flow. In addition, other companies may not use Adjusted EBITDA or may use other non-GAAP measures, limiting the usefulness of Adjusted EBITDA for purposes of comparison. The Company’s presentation of Adjusted EBITDA should not be construed as an inference that the Company will not incur expenses that are the same as or similar to the adjustments in this presentation. Therefore, Adjusted EBITDA should only be used to evaluate the Company’s results of operations in conjunction with the corresponding GAAP measures. The Company compensates for the limitations of Adjusted EBITDA by relying upon GAAP results to gain a complete picture of the Company’s performance. Because Adjusted EBITDA is a non-GAAP financial measure, as defined by the SEC, the Company includes in the tables below reconciliations of Adjusted EBITDA to the most directly comparable financial measures calculated and presented in accordance with GAAP. View source version on businesswire.com: https://www.businesswire.com/news/home/20260729055837/en/ Contacts Keith E. Pratt EVP & Chief Financial Officer925-606-9200

Anchor Capital Management fully exited its position in Patrick Industries (NASDAQ:PATK) during the first quarter, selling 116,967 shares in a trade estimated at $14.46 million based on quarterly average pricing, according to a May 15, 2026, SEC filing. According to an SEC filing dated May 15, 2026, Anchor Capital sold all 116,967 shares of Patrick Industries in the first quarter. The estimated transaction value was $14.46 million, based on the average closing price for the period. The fund reported holding zero shares at quarter’s end, with the position value dropping by $12.68 million, reflecting both trading activity and market movements. The position was fully liquidated, reducing Patrick Industries from 11.3% of the fund’s assets in the prior quarter to zero as of March 31, 2026. Post-filing, top holdings were: NASDAQ: HLMN: $21.10 million (22.8% of AUM) NASDAQ: MGRC: $20.43 million (22.0% of AUM) NASDAQ: LIND: $16.99 million (18.3% of AUM) NYSE: SXI: $14.33 million (15.5% of AUM) NASDAQ: VITL: $8.77 million (9.5% of AUM) As of May 14, 2026, PATK shares were priced at $94.14, up 10% over the past year and underperforming the S&P 500 by about 17 percentage points. Patrick Industries manufactures and distributes components, building products, and materials for the recreational vehicle, marine, manufactured housing, and industrial markets. The company operates through manufacturing and distribution segments, generating revenue from the sale of furniture, cabinetry, countertops, electronics, and related building materials. It serves OEMs and manufacturers in the RV, marine, manufactured housing, and industrial sectors across the United States, China, and Canada. Patrick Industries, Inc. is a leading supplier of building products and materials for the recreational vehicle, marine, and manufactured housing industries, with a significant presence in North America and select international markets. The company leverages a vertically integrated business model to deliver a broad portfolio of components and value-added solutions to OEM customers. Its scale, diverse product offerings, and established distribution network provide a competitive advantage in serving cyclical end markets. Patrick Industries has continued executing well operationally, but investors appear split on how much longer RV and housing softness can weigh on results, especially with consumer spending showing cracks in discretionary categories. Shares have plunged nearly 40% since February alone.The company’s latest quarter showed both the strengths and pressures in the story. First-quarter revenue slipped slightly to $997 million, while operating margin held steady at 6.5%. Marine revenue jumped 14%, and powersports revenue surged 28%, helping offset weaker RV and housing demand. Meanwhile, Patrick continued gaining wallet share, with RV content per unit rising 8% and marine content per unit climbing 17%. Management also kept leaning into shareholder returns, buying back roughly $15 million of stock during the quarter and another $15 million in April.For long-term investors, the key question is whether Patrick’s diversification can outweigh macro pressure in RVs and housing. The company still generated nearly $194 million in trailing 12-month free cash flow and maintained $734 million in liquidity, giving it flexibility if demand weakens further. Before you buy stock in Patrick Industries, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Patrick Industries wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $469,293!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,381,332!* Now, it’s worth noting Stock Advisor’s total average return is 993% — a market-crushing outperformance compared to 207% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of May 16, 2026. Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Hillman Solutions. The Motley Fool recommends Lindblad Expeditions, McGrath RentCorp, and Vital Farms. The Motley Fool has a disclosure policy. What to Know About This Fund's $14 Million Patrick Industries Exit After a Tough Quarter was originally published by The Motley Fool