Investment

The Motley Fool

McGrath RentCorp Q2 EPS Jumps 74 Percent

July 25, 2025

12:55 AM

7 min read

AI Enhanced

investmentstocksindustrialstechnologymarket cyclesseasonal analysismarket

Key Takeaways

Interestingly, McGrath RentCorp (MGRC 0. 83%), a leading vider of modular buildings, portable storage, and electronic test equipment rentals, dered strong results in its second–quarter 2025 earnings released on July...

Article Overview

Quick insights and key information

Reading Time

7 min read

Estimated completion

Overview and Success FactorsMcGrath RentCorp operates a diversified rental portfolio spanning four main segments: Mobile Modular (modular building rentals), Portable Storage (storage container rentals), TRS-RenTelco (electronic test equipment rental), and Enviroplex (modular building sales)

This range allows the company to serve different sectors, from education and construction to nology

Furthermore, The company’s focus has been on maintaining strong cash flow, quick investment recovery, and prudent capital allocation

Conversely, Managing high utilization rates and dering excellent customer experience are crucial for success, considering recent developments

Additionally, The company’s recent cash inflow from the termination of a merger agreement resulted in net ceeds of $116. 8 million during the year December 31, 2024

Key factors for performance include diverse revenue s, effective fleet management, and the ability to grow market in competitive rental and service (something worth watching), in light of current trends

Quarterly Highlights: Segment Performance and TrendsIn the period, McGrath RentCorp exceeded GAAP revenue and earnings expectations

Top-line growth in the Mobile Modular and TRS-RenTelco segments offset headwinds in Portable Storage, given the current landscape

Moreover, The Mobile Modular segment, which rents modular buildings used in commercial and education settings, reported rental revenue of $81. 9 million (up 5% year over year) (GAAP) and rental-related services revenue of $32

Meanwhile, 2 million (up 11%)

Sales revenue for Mobile Modular rose 13%, but the gross margin on sales narrowed to 32%, compared to 38% a year earlier (Q2 2025 versus Q2 2024)

The company attributed this margin decline to a higher mix of new versus used sales

In contrast, Selling and administrative costs saw a notable increase, mainly due to higher labor spend

Fleet utilization for Mobile Modular dropped from 78. 4% in Q2 2024 to 73, in today's market environment

Moreover, 7% in Q2 2025

The Portable Storage segment, which supplies rental storage containers, continued to experience weak demand due to lower commercial ject activity, considering recent developments

Furthermore, On the other hand, Rental revenue for Portable Storage fell by 5% compared to Q2 2024, and rental-related services revenue decreased from $4. 6 million to $4. 4 million over the same period

At the same time, Utilization dropped to 61 (something worth watching)

Moreover, 1% from 66, amid market uncertainty. 1% in Q2 2024

Sales revenue for Portable Storage increased 28% to $69. 8 million compared to Q2 2024, but gross fit on rental revenues for Portable Storage declined 9% to $14. 0 million compared to Q2 2024

The company noted it has no urgent need to liquidate storage assets, as the average container has a long useful life

Nevertheless, TRS-RenTelco, which rents out electronic test equipment to customers in sectors semiconductors and communications, showed robust performance (something worth watching)

Rental revenue for TRS-RenTelco grew 7% to $27, given the current landscape. 1 million compared to Q2 2024, and sales rose 32% to $7 (which is quite significant)

Gross fit on rental operations imved by 32%, and utilization for TRS-RenTelco increased from 56, given the current landscape. 5% in Q2 2024 to 64. 8% in Q2 2025, reflecting broad-based demand and imved ject starts (something worth watching)

The gross margin on sales for this unit contracted to 47% in Q2 2025 from the prior year’s 54% in Q2 2024

The company continued to emphasize asset management, focusing on refurbishing rather than heavily in new fleet additions during a period of flat to declining utilization in the first half of 2025

Capital expenditures for rental equipment in the first half of 2025 totaled $50

At the same time, 2 million, with full-year 2025 guidance unchanged at $115–$125 million

Operating cash flow (GAAP) for the first six months of 2025 was $109

Meanwhile, 7 million, down from $138 (an important development). 6 million for the first six months of 2024, but remained strong enough to enable investment and dividend growth

Nevertheless, On the other hand, The mutual termination of the company’s prior merger agreement resulted in net ceeds of $116. 8 million during the year December 31, 2024, which strengthened the balance sheet and kept leverage below 1 (fascinating analysis). 6 times adjusted EBITDA as of Q1 2025 (this bears monitoring)

Furthermore, On the dividend front, McGrath RentCorp declared a quarterly dividend of $0. 485 per, up from $0. 475 in Q2 2024

Furthermore, This marks a steady trend of annual dividend increases and results in a 1

In contrast, 7% yield as of the July 23, 2025 closing price of $115, considering recent developments

There were no sudden or unusual changes to the payout policy

However, Looking Ahead: Guidance and Investor ConsiderationsManagement modestly raised its lower end of full-year 2025 guidance for both revenue and adjusted EBITDA (noteworthy indeed)

At the same time, Total revenue is now expected to fall between $925 million and $960 million, compared to the prior range of $920 million to $960 million

Capital expenditure plans for rental equipment remain unchanged from prior jections

In its ary, even so, it highlighted caution due to persistent uncertainties in commercial construction and the risk of further softness in utilization rates (which is quite significant), given the current landscape

Observers are ly to focus closely on margin development, trends in asset utilization, and demand signals in the construction and education as potential indicators of future company performance

This leads to the conclusion that company’s guidance bands remain wide, in light of current trends

Revenue and net income presented using U

Generally accepted accounting principles (GAAP) unless otherwise noted

The Author JesterAI is our friendly Foolish AI

However, It's based on a variety of Large Language Models (LLMs) and prietary Motley Fool systems to generate summaries of news

The Motley Fool stands behind the work of our editorial team and JesterAI, and takes ultimate responsibility for the content of everything JesterAI duces, in light of current trends

JesterAI JesterAI is a Foolish AI, based on a variety of Large Language Models (LLMs) and prietary Motley Fool systems, given current economic conditions

All published by JesterAI are reviewed by our editorial team, and The Motley Fool takes ultimate responsibility for the content of this article

JesterAI cannot own stocks and so it has no positions in any stocks mentioned, considering recent developments

The Motley Fool recommends McGrath RentCorp

At the same time, The Motley Fool has a disclosure policy.

More insights from FinancialBooklet

investment

Leaders, laggards after Powell's speech — plus, key Starbucks, Honeywell updates

Every weekday, the Investing Club releases the Homestretch; an actionable afternoon update just in time for the last hour of trading.

CNBC

investment

Cracker Barrel’s first rebrand in nearly 50 years backfired. The company’s stock lost nearly $100 million after introducing a more minimalist look

The restaurant chain has gotten heat, accused of going too woke.