About McGrath RentCorp

McGrath RentCorp operates as a diversified business-to-business rental company. Segments As of December 31, 2023, the company consisted of four segments: modular building segment (Mobile Modular); portable storage container segment (Portable Storage); electronic test equipment segment (TRS-RenTelco); and classroom manufacturing business selling modular buildings used primarily as classrooms in California (Enviroplex). Relocatable Modular Buildings The company’s modular rental fleet includes a full range of styles and sizes. The company considers its modulars to be among the most attractive and well-designed available. The company’s modulars are manufactured to comply with state building codes, have a low risk of obsolescence, and can be modified or reconfigured to accommodate a wide variety of customer needs. Rentals As of December 31, 2023, Mobile Modular owned 40,382 new or previously rented modulars. As of December 31, 2023, fleet utilization was 79.4% and average fleet utilization during 2023 was 79.7%. Sales In addition to operating its rental fleet, Mobile Modular sells modulars to customers. These sales may arise out of its marketing efforts for the rental fleet and from existing equipment already on rent or from specific requests for new buildings for a permanent need. The company has a dedicated team that focuses on these custom sale opportunities. Such sales can be of either new or used units from the rental fleet, which permits some turnover of older units. Mobile Modular typically provides limited 90-day warranties on used modulars and passes through the manufacturers’ one-year warranty on new units to its customers. Enviroplex manufactures portable classrooms built to the requirements of the California Division of the State Architect (DSA) and sells directly to California public school districts and other educational institutions. Seasonality Typically, during each calendar year, the company’s highest numbers of classrooms are shipped for rental and sale orders during the second and third quarters for delivery and installation prior to the start of the upcoming school year. The majority of classrooms shipped in the second and third quarters have rental start dates during the third quarter, thereby making the fourth quarter the first full quarter (year ended December 31, 2023) of rental revenues recognized for these transactions. Classroom Rentals and Sales to Public Schools (K-12) Mobile Modular and Enviroplex provide classroom and specialty space needs serving public and private schools, colleges and universities. Within the educational market, the rental (by Mobile Modular) and sale (by Enviroplex and Mobile Modular) of modulars to public school districts for use as portable classrooms, restroom buildings and administrative offices for kindergarten through grade twelve (K-12) are a significant portion of the company’s revenues. Mobile Modular rents and sells classrooms in California, Florida, Georgia, Louisiana, Maryland, North Carolina, the Pacific Northwest, South Carolina, Texas, Virginia and Washington, D.C. Enviroplex sells classrooms in the California market. California is Mobile Modular’s largest educational market. Historically, demand in this market has been fueled by shifting and fluctuating student populations, insufficient funding for new school construction, class size reduction programs, modernization of aging school facilities and the phasing out of portable classrooms no longer compliant with current building codes. Portable Storage Containers segment Portable Storage’s rental inventory consists of steel containers used to provide a temporary storage solution that is delivered to the customer’s location and addresses the need for secure, temporary storage with immediate access to the unit. The containers are comprised of the following products: Storage containers, which consist of new and used steel shipping containers certified under International Organization for Standardization (ISO) standards, that provide a flexible, low cost alternative to warehousing, while offering greater security, convenience and immediate accessibility. Storage containers are made from weather-resistant corrugated steel and are 8 feet wide and available in lengths ranging from 8 to 53 feet, with 20-foot and 40-foot length containers being the most common. Office containers are either modified or specifically manufactured containers that provide self-contained office space with maximum design flexibility. Office containers are often referred to as ground level offices (GLOs). GLOs provide the advantage of ground level accessibility and high security. Rentals Portable Storage rents its storage and office containers typically for rental periods of one to twelve months, although in some instances, rental terms can be over a year or longer. Electronic Test Equipment segment TRS-RenTelco rents and sells electronic test equipment nationally and internationally from two facilities located on the grounds of the Dallas Fort Worth International Airport in Grapevine, Texas (the Dallas facility) and Dollard-des-Ormeaux, Canada (the Montreal facility). TRS-RenTelco’s revenues are derived from the rental and sale of general purpose and communications test equipment to a broad range of companies, from Fortune 500 to middle and smaller market companies, in the aerospace, defense, communications, manufacturing and semiconductor industries. Electronic test equipment revenues are primarily affected by the business activity within these industries related to research and development, manufacturing, and communication infrastructure installation and maintenance. The Dallas facility, TRS-RenTelco’s primary operating location, houses the electronic test equipment inventory, sales engineers, calibration laboratories, and operations staff for the U.S. and international business. The Montreal facility houses sales engineers and operations staff to serve the Canadian market. Engineers, technicians and scientists utilize general purpose electronic test equipment in developing products, controlling manufacturing processes, completing field service applications and evaluating the performance of their own electrical and electronic equipment. These instruments are rented primarily to aerospace, defense, electronics, industrial, research and semiconductor industries. Communications test equipment, including fiber optic test equipment, is utilized by technicians, engineers and installation contractors to evaluate voice, data and multimedia communications networks, to install fiber optic cabling, and in the development and manufacturing of transmission, network and wireless products. These instruments are rented primarily to manufacturers of communications equipment and products, electrical and communications installation contractors, field technicians, and service providers. To date, Anritsu, Viavi Solutions and Fluke Networks, a division of Fortive Corporation, have manufactured a significant portion of TRS-RenTelco’s communications test equipment, with the remainder acquired from over 40 other manufacturers. TRS-RenTelco’s general purpose test equipment rental inventory includes oscilloscopes, amplifiers, analyzers (spectrum, network and logic), signal source and power source test equipment. The communications test equipment rental inventory includes network and transmission test equipment for various fiber, copper and wireless networks. TRS-RenTelco occasionally rents electronic test equipment from other rental companies and re-rents the equipment to customers. Market TRS-RenTelco markets its electronic test equipment throughout the United States, Canada, and, to a limited extent, other countries. TRS-RenTelco attracts customers through its outside sales force, website at www.TRSRenTelco.com, telemarketing program, trade show participation, paid internet search and electronic mail campaigns. Rentals TRS-RenTelco rents electronic test equipment typically for rental periods of one to six months, although in some instances, rental terms can be up to a year or longer. Dispositions On February 1, 2023, the company completed the sale of its former liquid and solid containment segment (Adler Tanks) to Ironclad Environmental Solutions, Inc., a portfolio company of Kinderhook Industries. The company owns Vesta Housing Solutions Holdings, Inc. (Vesta Modular), a portfolio company of Kinderhook Industries that was a leading provider of temporary and permanent modular space solutions. Government Regulations The company is subject to certain environmental, transportation, anti-corruption, import controls, health and safety and other laws and regulations in locations in which it operates. The company’s activity in jurisdictions in which it operates is additionally subject to anti-bribery laws and regulations, such as the U.S. Foreign Corrupt Practices Act of 1977, which prevent companies and their officers, employees and agents from making payments to officials and public entities of foreign countries to facilitate obtaining new contracts. History McGrath RentCorp, a California corporation, was founded in 1979. The company was incorporated in 1979.