McGrath RentCorp Reports 4% Revenue Increase and 23% Net Income Growth in Q1 2025

McGrath RentCorp reported a 4% increase in consolidated revenues for the first quarter of 2025, totaling $195.4 million, compared to $187.8 million in the same period of 2024. The company's net income rose by 23% to $28.2 million, or $1.15 per diluted share, up from $22.8 million, or $0.93 per diluted share, in the prior year. This growth in profitability was primarily driven by an increase in gross profit from rental operations, particularly in the Mobile Modular segment, and a significant reduction in interest expenses, which fell by 35% to $8.2 million due to lower average debt levels.

In terms of operational performance, McGrath RentCorp's gross profit increased by 3% to $96.4 million, with the Mobile Modular segment contributing a gross profit of $65.5 million, a 6% increase from the previous year. The Portable Storage segment, however, experienced a decline in gross profit of 18%, attributed to lower rental and rental-related service revenues. The TRS-RenTelco segment saw a 7% increase in gross profit, reflecting higher rental revenues. The company’s selling and administrative expenses rose slightly by 1% to $50.9 million, while the absence of significant transaction costs related to the terminated merger with WillScot Mobile Mini in the previous year also contributed to improved profitability.

Customer engagement metrics showed that rental operations continued to be a significant revenue driver, accounting for approximately 79% of total revenues. The company reported a total of 24,611,329 shares of common stock outstanding as of April 23, 2025. The average rental equipment on rent increased by 4% compared to the previous year, although average rental rates saw a slight decline. The company’s rental equipment utilization rates were reported at 74.3% for Mobile Modular, 61.0% for Portable Storage, and 64.9% for TRS-RenTelco.

Looking ahead, McGrath RentCorp remains cautious about macroeconomic conditions, including inflation and geopolitical uncertainties, which could impact customer spending and project initiation. The company anticipates that these factors may lead to delays in customer decisions, potentially affecting future revenues. Despite these challenges, management expressed confidence in the company’s ability to navigate the current economic landscape, supported by a strong balance sheet and compliance with financial covenants. The company declared a quarterly cash dividend of $0.485 per share, reflecting a 2% increase from the previous year, indicating a commitment to returning value to shareholders while maintaining operational stability.