What changed in MCGRATH RENTCORP's 10-K — 2023 vs 2024
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Paragraph-level year-over-year comparison of MCGRATH RENTCORP's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.
+262 added−290 removedSource: 10-K (2025-02-19) vs 10-K (2024-02-21)
Top changes in MCGRATH RENTCORP's 2024 10-K
262 paragraphs added · 290 removed · 211 edited across 7 sections
- Item 7. Management's Discussion & Analysis+145 / −134 · 109 edited
- Item 1A. Risk Factors+57 / −86 · 49 edited
- Item 1. Business+34 / −44 · 30 edited
- Item 1C. Cybersecurity+10 / −11 · 9 edited
- Item 5. Market for Registrant's Common Equity+6 / −5 · 5 edited
Item 1. Business
Business — how the company describes what it does
30 edited+4 added−14 removed98 unchanged
Item 1. Business
Business — how the company describes what it does
30 edited+4 added−14 removed98 unchanged
2023 filing
2024 filing
Biggest changeBusiness Model The Company invests capital in rental products and generally has recovered its original investment through rents less cash operating expenses in a relatively short period of time compared to the product’s rental life. When the Company’s rental products are sold, the proceeds generally have covered a high percentage of the original investment.
Biggest changeDue to this determination, the Company has excluded such transaction costs from Selling and administrative expenses and reported these costs separately on the consolidated statements of income as non-operating expenses. - 2 - Business Model The Company invests capital in rental products and generally has recovered its original investment through rents less cash operating expenses in a relatively short period of time compared to the product’s rental life.
Any waivers to the Code of Business Conduct and Ethics and any amendments to such - 4 - code applicable to our Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer or persons performing similar functions, will be posted on our web site. - 5 - RELOCATABLE MODULAR BUILDINGS Description Modulars are designed for use as classrooms, temporary offices adjacent to existing facilities, sales offices, construction field offices, restroom buildings, health care clinics, child care facilities, office space and for a variety of other purposes and may be moved from one location to another.
Any waivers to the Code of Business Conduct and Ethics and any amendments to such code applicable to our Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer or persons performing similar functions, will be posted on our web site. - 4 - RELOCATABLE MODULAR BUILDINGS Description Modulars are designed for use as classrooms, temporary offices adjacent to existing facilities, sales offices, construction field offices, restroom buildings, health care clinics, child care facilities, office space and for a variety of other purposes and may be moved from one location to another.
Modular buildings (“modulars”) have an estimated life of eighteen years compared to the typical rental term of twelve to twenty-four months, portable storage containers ("containers") have an estimated life of twenty-five years compared to a typical rental term of three to twelve months and electronic test equipment has an estimated life range of one to eight years (depending on the type of product) compared to a typical rental term of one to six months. - 3 - • We believe short-term rental rates typically recover the Company’s original investment quickly based on the respective product’s annual yield, or annual rental revenues divided by the average cost of rental equipment.
Modular buildings (“modulars”) have an estimated life of eighteen years compared to the typical rental term of twelve to twenty-four months, portable storage containers ("containers") have an estimated life of twenty-five years compared to a typical rental term of three to twelve months and electronic test equipment has an estimated life range of one to eight years (depending on the type of product) compared to a typical rental term of one to six months. • We believe short-term rental rates typically recover the Company’s original investment quickly based on the respective product’s annual yield, or annual rental revenues divided by the average cost of rental equipment.
Our activity in jurisdictions in which we operate is additionally subject to anti-bribery laws and regulations, such as the US 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.
Our activity in jurisdictions in which we operate is additionally subject to anti-bribery - 3 - laws and regulations, such as the US 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.
There is no certainty on the timing of the bond sales and it could take additional years before projects funded by these bonds generate meaningful demand for relocatable classrooms. - 9 - PORTABLE STORAGE CONTAINERS Description Portable Storage’s rental inventory is comprised 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.
There is no certainty on the timing of the bond sales and it could take additional years before projects funded by these bonds generate meaningful demand for relocatable classrooms. - 8 - PORTABLE STORAGE CONTAINERS Description Portable Storage’s rental inventory is comprised 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.
Portable Storage may encounter increased competition from existing competitors or from new entrants in the future. - 11 - ELECTRONIC TEST EQUIPMENT Description 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”).
Portable Storage may encounter increased competition from existing competitors or from new entrants in the future. - 10 - ELECTRONIC TEST EQUIPMENT Description 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”).
At December 31, 2023, the Company was comprised of four reportable business segments: (1) its modular building segment (“Mobile Modular”); (2) its portable storage container segment (“Portable Storage”); (3) its electronic test equipment segment (“TRS-RenTelco”); and (4) its classroom manufacturing business selling modular buildings used primarily as classrooms in California (“Enviroplex”).
At December 31, 2024, the Company was comprised of four reportable business segments: (1) its modular building segment (“Mobile Modular”); (2) its portable storage container segment (“Portable Storage”); (3) its electronic test equipment segment (“TRS-RenTelco”); and (4) its classroom manufacturing business selling modular buildings used primarily as classrooms in California (“Enviroplex”).
Consolidated Rental and Sales Revenue percentage is calculated by dividing Modular rental and sales revenues to public schools (K-12) by the Company’s consolidated rental and sales revenues from continuing operations. 2.
Consolidated Rental and Sales Revenue percentage is calculated by dividing Modular rental and sales revenues to public schools (K-12) by the Company’s consolidated rental and sales revenues from continuing operations.
Over the last three years, used equipment sold each year represented approximately 2% of rental equipment, and has been, on average, 14 years old with sale proceeds above its net book value. Competitive Strengths Strong Industry Position – Mobile Modular has a leading modular building fleet in the United States.
Over the last three years, used equipment sold each year represented approximately 2% of rental equipment, and has been, on average, 16 years old with sale proceeds above its net book value. Competitive Strengths Strong Industry Position – Mobile Modular has a leading modular building fleet in the United States.
Customer Service - The Company believes that its focus on providing excellent service to its customers provides a competitive advantage. TRS-RenTelco strives to provide exemplary service to fulfill its commitments to its customers. TRS-RenTelco prides itself - 12 - in providing solutions to meet customers’ needs by having equipment available and responding quickly and thoroughly to their requests.
Customer Service - The Company believes that its focus on providing excellent service to its customers provides a competitive advantage. TRS-RenTelco strives to provide exemplary service to fulfill its commitments to its customers. TRS-RenTelco prides itself - 11 - in providing solutions to meet customers’ needs by having equipment available and responding quickly and thoroughly to their requests.
As a result, our competitors that have these advantages may be better able to attract and retain customers and provide their products and services at lower rental rates. Portable Storage competes with these companies based upon product - 10 - availability, product quality, price and service.
As a result, our competitors that have these advantages may be better able to attract and retain customers and provide their products and services at lower rental rates. Portable Storage competes with these companies based upon product - 9 - availability, product quality, price and service.
The Company depreciates its modular buildings over an 18 year estimated useful life - 6 - to a 50% residual value. Older buildings continue to be productive primarily because of Mobile Modular’s focus on ongoing fleet maintenance.
The Company depreciates its modular buildings over an 18 year estimated useful life - 5 - to a 50% residual value. Older buildings continue to be productive primarily because of Mobile Modular’s focus on ongoing fleet maintenance.
Modulars are generally provided with installed heat, air conditioning, lighting, electrical outlets and floor covering, and may have customized interiors including partitioning, cabinetry and plumbing facilities. Mobile Modular purchases new modulars from various manufacturers who build to Mobile Modular’s design specifications. During 2023, Mobile Modular purchased 30% of its modular units from one manufacturer.
Modulars are generally provided with installed heat, air conditioning, lighting, electrical outlets and floor covering, and may have customized interiors including partitioning, cabinetry and plumbing facilities. Mobile Modular purchases new modulars from various manufacturers who build to Mobile Modular’s design specifications. During 2024, Mobile Modular purchased 18% of its new modular units from one manufacturer.
Some of our competitors may offer similar equipment for lease, rental or sales at lower prices and may offer more extensive servicing, or financing options. - 13 - REPORTABLE SEGMENTS For segment information regarding the Company’s four reportable business segments: Mobile Modular, Portable Storage, TRS-RenTelco and Enviroplex, see “Note 15.
Some of our competitors may offer similar equipment for lease, rental or sales at lower prices and may offer more extensive servicing, or financing options. - 12 - REPORTABLE SEGMENTS For segment information regarding the Company’s four reportable business segments: Mobile Modular, Portable Storage, TRS-RenTelco and Enviroplex, see “Note 16.
Segment Reporting” to the audited Consolidated Financial Statements of the Company included in “Item 8. Financial Statements and Supplementary Data.” - 14 -
Segment Reporting” to the audited Consolidated Financial Statements of the Company included in “Item 8. Financial Statements and Supplementary Data.” - 13 -
Sales Profit from equipment sales is a material component of TRS-RenTelco’s overall annual earnings. Gross profit from sales of both used and new equipment over the last five years generally has ranged from approximately 20% to 22% of total annual gross profit for our electronics division.
Sales Profit from equipment sales is a material component of TRS-RenTelco’s overall annual earnings. Gross profit from sales of both used and new equipment over the last five years generally has ranged from approximately 21% to 27% of total annual gross profit for our electronics division.
The largest electronic test equipment sale during 2023 represented 7% of electronic test equipment sales, 1% of the Company’s consolidated sales and less than 1% of consolidated revenues. There is intense competition in the sales of electronic test equipment from a world-wide network of test equipment brokers and resellers, legacy rental companies, and equipment manufacturers.
The largest electronic test equipment sale during 2024 represented 3% of electronic test equipment sales, less than 1% of the Company’s consolidated sales and less than 1% of consolidated revenues. There is intense competition in the sales of electronic test equipment from a world-wide network of test equipment brokers and resellers, legacy rental companies, and equipment manufacturers.
Information included on our website is not incorporated by reference to this Form 10-K. Furthermore, all reports the Company files with the SEC are available through the SEC’s website at www.sec.gov. We have a Code of Business Conduct and Ethics which applies to all directors, officers and employees. Copies of this code can be obtained at our website www.mgrc.com .
Information included on our website is not incorporated by reference to this Form 10-K. Furthermore, all reports the Company files with the SEC are available through the SEC’s website at www.sec.gov . We have a Code of Business Conduct and Ethics which applies to all directors, officers and employees.
For 2023, gross profit on equipment sales was approximately 21% of total division gross profit. Equipment sales are driven by the turnover of older technology rental equipment, to maintain target utilization at a model number level, and new equipment sales opportunities. In 2023, approximately 18% of the electronic test equipment revenues were derived from sales.
For 2024, gross profit on equipment sales was approximately 27% of total division gross profit. Equipment sales are driven by the turnover of older technology rental equipment, to maintain target utilization at a model number level, and new equipment sales opportunities. In 2024, approximately 20% of the electronic test equipment revenues were derived from sales.
Such sales can be of either new or used units from the rental fleet, which permits some turnover of older units. During 2023 Mobile Modular’s largest sale represented approximately 4% of Mobile Modular’s sales, 3% of the Company’s consolidated sales and less than 1% of the Company’s consolidated revenues.
Such sales can be of either new or used units from the rental fleet, which permits some turnover of older units. During 2024 Mobile Modular’s largest sale represented approximately 5% of Mobile Modular’s sales, 4% of the Company’s consolidated sales and 1% of the Company’s consolidated revenues.
The Montreal facility houses sales engineers and operations staff to serve the Canadian market. As of December 31, 2023, the original cost of electronic test equipment inventory was comprised of 80% general purpose electronic test equipment and 20% communications electronic test equipment.
The Montreal facility houses sales engineers and operations staff to serve the Canadian market. As of December 31, 2024, the original cost of electronic test equipment inventory was comprised of 79% general purpose electronic test equipment and 21% communications electronic test equipment.
The following table shows the approximate percentages of the Company’s modular rental and sales revenues, and of its consolidated rental and sales revenues for the past three years, that rentals and sales to these schools constitute: - 8 - Rentals and Sales to Public Schools (K-12) as a Percentage of Total Rental and Sales Revenues Percentage of: 2023 2022 2021 Modular Rental Revenues (Mobile Modular) 26% 30% 34% Modular Sales Revenues (Mobile Modular & Enviroplex) 30% 43% 50% Modular Rental and Sales Revenues (Mobile Modular & Enviroplex) 27% 35% 40% Consolidated Rental and Sales Revenues 1 18% 21% 24% 1.
The following table shows the approximate percentages of the Company’s modular rental and sales revenues, and of its consolidated rental and sales revenues for the past three years, that rentals and sales to these schools constitute: - 7 - Rentals and Sales to Public Schools (K-12) as a Percentage of Total Rental and Sales Revenues Percentage of: 2024 2023 2022 Modular Rental Revenues (Mobile Modular) 29% 26% 30% Modular Sales Revenues (Mobile Modular & Enviroplex) 38% 30% 43% Modular Rental and Sales Revenues (Mobile Modular & Enviroplex) 33% 27% 35% Consolidated Rental and Sales Revenues 1 24% 18% 21% 1.
At December 31, 2023, TRS-RenTelco had an electronic test equipment rental inventory including accessories with an aggregate cost of $377.6 million. Utilization is calculated each month by dividing the cost of the rental equipment on rent by the total cost of rental equipment, excluding accessory equipment. Utilization was 55.9% as of December 31, 2023 and averaged 58.9% during the year.
At December 31, 2024, TRS-RenTelco had an electronic test equipment rental inventory including accessories with an aggregate cost of $344.0 million. Utilization is calculated each month by dividing the cost of the rental equipment on rent by the total cost of rental equipment, excluding accessory equipment. Utilization was 58.6% as of December 31, 2024 and averaged 57.3% during the year.
Utilization was 71.5% at December 31, 2023 and averaged 77.3% during the year. Seasonality Rental activity may vary depending upon the extent of retail activity that typically occurs during the fourth quarter and the impact inclement weather may have on construction activity. Competition The portable storage container rental industry is highly competitive.
Utilization was 59.8% at December 31, 2024 and averaged 64.9% during the year. Seasonality Rental activity may vary depending upon the extent of retail activity that typically occurs during the fourth quarter and the impact inclement weather may have on construction activity. Competition The portable storage container rental industry is highly competitive.
Proposed Acquisition by WillScot Mobile Mini On January 28, 2024, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with WillScot Mobile Mini Holdings Corp., a Delaware corporation (“WillScot Mobile Mini”), Brunello Merger Sub I, Inc., a California corporation and a direct wholly owned subsidiary of WillScot Mobile Mini (“Merger Sub I”), and Brunello Merger Sub II, LLC, a Delaware limited liability company and direct wholly owned subsidiary of WillScot Mobile Mini (“Merger Sub II”).
Mutual decision to terminate Merger Agreement with WillScot Mobile Mini Holdings Corp As previously disclosed, on January 28, 2024, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”), with WillScot Mobile Mini Holdings Corp., a Delaware corporation ("WillScot Mobile Mini”), Brunello Merger Sub I, Inc., a California corporation and a direct wholly owned subsidiary of WillScot Mobile Mini, and Brunello Merger Sub II, LLC, a Delaware limited liability company and direct wholly owned subsidiary of WillScot Mobile Mini.
At December 31, 2023, Portable Storage owned 42,210 containers with an aggregate cost of $236.1 million or an average cost per unit of $5,594. Utilization is calculated each month by dividing the cost of the rental equipment on rent by the total cost of rental equipment, excluding new and accessory equipment.
At December 31, 2024, Portable Storage owned 41,888 containers with an aggregate cost of $240.8 million or an average cost per unit of $5,750. Utilization is calculated each month by dividing the cost of the rental equipment on rent by the total cost of rental equipment, excluding new and accessory equipment.
Human Capital Management As of December 31, 2023, the Company had 1,204 employees, of whom 133 were primarily administrative and executive personnel, with 677, 180, 128 and 86 in the operations of Mobile Modular, Portable Storage, TRS-RenTelco and Enviroplex, respectively.
Human Capital Management As of December 31, 2024, the Company had 1,219 employees, of whom 142 were primarily administrative and executive personnel, with 687, 177, 133 and 80 in the operations of Mobile Modular, Portable Storage, TRS-RenTelco and Enviroplex, respectively.
At December 31, 2023, fleet utilization was 79.4% and average fleet utilization during 2023 was 79.7%. - 7 - Sales In addition to operating its rental fleet, Mobile Modular sells modulars to customers.
At December 31, 2024, fleet utilization was 75.1% and average fleet utilization during 2024 was 77.5%. - 6 - Sales In addition to operating its rental fleet, Mobile Modular sells modulars to customers.
At December 31, 2023, Mobile Modular owned 40,382 new or previously rented modulars, with an aggregate cost of $1,291.1 million including accessories, or an average cost per unit of $31,972.
At December 31, 2024, Mobile Modular owned 41,299 new or previously rented modulars, with an aggregate cost of $1,414.4 million including accessories, or an average cost per unit of $34,247.
With these characteristics, a significant base of rental assets on rent generates a considerable amount of operating cash flows to support continued rental asset growth.
When the Company’s rental products are sold, the proceeds generally have covered a high percentage of the original investment. With these characteristics, a significant base of rental assets on rent generates a considerable amount of operating cash flows to support continued rental asset growth.
Removed
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, for a cash sale price of $268.0 million. The consolidated financial statements present the historical financial results of the former Adler Tanks segment as discontinued operations for all periods presented.
Added
On September 17, 2024, the Company and WillScot Mobile Mini mutually agreed to terminate the Merger Agreement, effective upon WillScot Mobile Mini's cash payment of $180.0 million to the Company, which was received on September 20, 2024. Transaction costs attributed to the Merger Agreement are reported in the Company's Corporate segment.
Removed
On the same date, the Company acquired 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, for a cash purchase price of $437.2 million, subject to certain adjustments.
Added
Expenses recognized as a result of the terminated Merger Agreement during the year ended December 31, 2024, were $63.2 million. The termination payment received of $180.0 million, net of transaction costs, resulted in net proceeds received of $116.8 million during the year ended December 31, 2024.
Removed
The financial results of Vesta Modular were a part of the Mobile Modular segment since February 1, 2023.
Added
The Company determined that the transaction costs incurred on the terminated merger were significant and required separate presentation on the Company's consolidated statements of income for the year ended December 31, 2024.
Removed
The Merger Agreement provides that, upon the terms and subject to the conditions set forth therein, Merger Sub I will merge with and into the Company (the “First-Step Merger”), with the Company surviving the First-Step Merger and, immediately thereafter, the Company will merge with and into Merger Sub II (the “Second-Step Merger” and together with the First-Step Merger, the “Transaction”), with Merger Sub II surviving the - 2 - Second-Step Merger as a wholly owned subsidiary of WillScot Mobile Mini.
Added
Copies of this code can be obtained at our website www.mgrc.com .
Removed
Each of the parties to the Merger Agreement intends that the Transaction will be treated as a single integrated transaction that qualifies as a “reorganization” within the meaning of Section 368(a) of the U.S. Internal Revenue Code of 1986, as amended.
Removed
Consummation of the Transaction is subject to the approval of the Company’s shareholders, the receipt of required regulatory approvals, and satisfaction or waiver of other customary closing conditions. The First-Step Merger and the Second-Step Merger will be consummated on the same day.
Removed
On the terms and subject to the conditions set forth in the Merger Agreement, at the effective time of the First-Step Merger (the “Effective Time”), each share of common stock, no par value, of the Company (the “Company Common Stock”) issued and outstanding immediately prior to the Effective Time, other than shares of Company Common Stock owned by WillScot Mobile Mini or any subsidiary of WillScot Mobile Mini or the Company, and shares held by shareholders who did not vote in favor of the Transaction (or consent thereto in writing) and who are entitled to demand and properly demands appraisal of such shares, will be automatically converted into the right to receive either (1) $123 in cash (the “Per Share Cash Consideration”) or (2) 2.8211 (the “Exchange Ratio”) shares of validly issued, fully paid and nonassessable shares of common stock, par value $0.0001, of WillScot Mobile Mini (the “WillScot Mobile Mini Common Stock”) (the “Per Share Stock Consideration” together with the Per Share Cash Consideration, the “Merger Consideration”), as determined pursuant to the election and allocation procedures set forth in the Merger Agreement.
Removed
The Company’s shareholders will have the opportunity to elect to receive either the Per Share Cash Consideration or the Per Share Stock Consideration in respect of their Company Common Stock, provided that 60% of the Company Common Stock will be converted into the cash consideration and 40% of the Company Common Stock will be converted into the stock consideration.
Removed
The consummation of the Transaction is subject to certain closing conditions, including (i) the approval of the Company’s shareholders, (ii) the expiration or termination of all waiting periods applicable to the transactions contemplated by the Merger Agreement under the Hart-Scott Rodino Antitrust Improvements Act of 1976 (the “HSR Act,” and such expiration or termination, the “Antitrust Approval”), (iii) the absence of any order by any governmental authorities or other legal restraint or prohibition preventing the consummation of the transactions contemplated by the Merger Agreement, (iv) the effectiveness of the registration statement to be filed by WillScot Mobile Mini with SEC relating to the registration of shares of WillScot Mobile Mini Common Stock to be issued to the Company’s shareholders pursuant to the Merger Agreement and (v) other customary conditions specified in the Merger Agreement.
Removed
The parties have submitted their respective filings under the HSR Act with the U.S. Department of Justice and the Federal Trade Commission as contemplated by the Merger Agreement. The closing of the Transaction is not subject to any financing condition.
Removed
For additional information regarding the Transaction, please refer to our current report on Form 8-K and Amendment No. 1 on Form 8-K/A, each filed with the U.S. Securities and Exchange Commission on January 29, 2024.
Removed
Because the Transaction is not yet complete, and except as otherwise specifically stated, the descriptions and disclosures presented elsewhere in this Form 10-K assume the continuation of the Company as a public company.
Removed
During the year ended December 31, 2023, the Company determined that the Portable Storage segment met the criteria for separate segment reporting and the Company divested its Adler Tanks segment.
Removed
As a result of these changes, the rental and sales to public schools as a percentage of total rental and sales revenues for 2022 and 2021, have been restated to present the Mobile Modular and Enviroplex results from continuing operations only.
Item 1A. Risk Factors
Risk Factors — what could go wrong, per management
49 edited+8 added−37 removed153 unchanged
Item 1A. Risk Factors
Risk Factors — what could go wrong, per management
49 edited+8 added−37 removed153 unchanged
2023 filing
2024 filing
Biggest changeAcquisitions involve numerous risks, including the following: • difficulties in integrating the operations, technologies, products and personnel of the acquired companies; • diversion of management’s attention from normal daily operations of our business; • difficulties in entering markets in which we have no or limited direct prior experience and where competitors in such markets may have stronger market positions; • difficulties in complying with regulations applicable to any acquired business, such as environmental regulations, and managing risks related to an acquired business; - 19 - • timely completion of necessary financing and required amendments, if any, to existing agreements; • an inability to implement uniform standards, controls, procedures and policies; • undiscovered and unknown problems, defects, damaged assets liabilities, or other issues related to any acquisition that become known to us only after the acquisition; • negative reactions from our customers to an acquisition; • disruptions among employees related to any acquisition which may erode employee morale; • loss of key employees, including costly litigation resulting from the termination of those employees; • an inability to realize cost efficiencies or synergies that we may anticipate when selecting acquisition candidates; • recording of goodwill and non-amortizable intangible assets that will be subject to future impairment testing and potential periodic impairment charges; • incurring amortization expenses related to certain intangible assets; and • becoming subject to litigation.
Biggest changeAcquisitions involve numerous risks, including the following: • difficulties in integrating the operations, technologies, products and personnel of the acquired companies; • diversion of management’s attention from normal daily operations of our business; • difficulties in entering markets in which we have no or limited direct prior experience and where competitors in such markets may have stronger market positions; • regulatory hurdles in completing the transaction; • difficulties in complying with regulations applicable to any acquired business, such as environmental regulations, and managing risks related to an acquired business; • timely completion of necessary financing and required amendments, if any, to existing agreements; • an inability to implement uniform standards, controls, procedures and policies; • undiscovered and unknown problems, defects, damaged assets liabilities, or other issues related to any acquisition that become known to us only after the acquisition; • negative reactions from our customers to an acquisition; • disruptions among employees related to any acquisition which may erode employee morale; • loss of key employees, including costly litigation resulting from the termination of those employees; • an inability to realize cost efficiencies or synergies that we may anticipate when selecting acquisition candidates; • recording of goodwill and non-amortizable intangible assets that will be subject to future impairment testing and potential periodic impairment charges; • incurring amortization expenses related to certain intangible assets; and • becoming subject to litigation. - 16 - Acquisitions are inherently risky, and no assurance can be given that our recent and future acquisitions will be successful or will not adversely affect our business, operating results, or financial condition.
Our results and related ratios, such as gross margin, operating income percentage and effective tax rate may fluctuate as a result of a number of factors, some of which are beyond our control including but not limited to: • general economic conditions in the geographies and industries where we rent and sell our products; • legislative and educational policies where we rent and sell our products; • the budgetary constraints of our customers; • seasonality of our rental businesses and our end-markets; • success of our strategic growth initiatives; • costs associated with the launching or integration of new or acquired businesses; • the timing and type of equipment purchases, rentals and sales; • the nature and duration of the equipment needs of our customers; • the timing of new product introductions by us, our suppliers and our competitors; • the volume, timing and mix of maintenance and repair work on our rental equipment; • supply chain delays or disruptions; • our equipment mix, availability, utilization and pricing; • inflation in the cost of materials, labor and new rental equipment; • the mix, by state and country, of our revenues, personnel and assets; • rental equipment impairment from excess, obsolete or damaged equipment; • movements in interest rates or tax rates; • changes in, and application of, accounting rules; • changes in the regulations applicable to our business operations; and • claims and litigation matters.
Our results and related ratios, such as gross margin, operating income percentage and effective tax rate may fluctuate as a result of a number of factors, some of which are beyond our control including but not limited to: • general economic conditions in the geographies and industries where we rent and sell our products; • legislative and educational policies where we rent and sell our products; • the budgetary constraints of our customers; • seasonality of our rental businesses and our end-markets; • success of our strategic growth initiatives; • costs associated with the launching or integration of new or acquired businesses; • the timing and type of equipment purchases, rentals and sales; • the nature and duration of the equipment needs of our customers; • the timing of new product introductions by us, our suppliers and our competitors; • the volume, timing and mix of maintenance and repair work on our rental equipment; • supply chain delays or disruptions; • our equipment mix, availability, utilization and pricing; • inflation in the cost of materials, labor and new rental equipment; • the mix, by state and country, of our revenues, personnel and assets; • rental equipment impairment from excess, obsolete or damaged equipment; • movements in interest rates or tax rates; • changes in, and application of, accounting rules; • changes in the law and regulations applicable to our business operations; and • claims and litigation matters.
If the currency exchange rates change unfavorably, the value of net receivables we receive in foreign currencies and later convert to U.S. dollars after the unfavorable change would be diminished. This could have a negative impact on our reported operating results. We currently do not engage in hedging strategies to mitigate this risk.
If the currency exchange rates change unfavorably, the value of net - 24 - receivables we receive in foreign currencies and later convert to U.S. dollars after the unfavorable change would be diminished. This could have a negative impact on our reported operating results. We currently do not engage in hedging strategies to mitigate this risk.
The market price of our common stock fluctuates on the NASDAQ Global Select Market and is likely to be affected by a number of factors including but not limited to: • our operating performance and the performance of our competitors, and in particular any variations in our operating results or dividend rate from our stated guidance or from investors’ expectations; • any changes in general conditions in the global economy, the industries in which we operate or the global financial markets; • investors’ reaction to our press releases, public announcements or filings with the SEC; • the stock price performance of our competitors or other comparable companies; • any changes in research analysts’ coverage, recommendations or earnings estimates for us or for the stocks of other companies in our industry; • any sales of common stock by our directors, executive officers and our other large shareholders, particularly in light of the limited trading volume of our stock; • any merger and acquisition activity that involves us or our competitors; and • other announcements or developments affecting us, our industry, customers, suppliers or competitors.
The market price of our common stock fluctuates on the NASDAQ Global Select Market and is likely to be affected by a number of factors including but not limited to: • our operating performance and the performance of our competitors, and in particular any variations in our operating results or dividend rate from our stated guidance or from investors’ expectations; • any changes in general conditions in the global economy, the industries in which we operate or the global financial markets; • investors’ reaction to our press releases, public announcements or filings with the SEC; • the stock price performance of our competitors or other comparable companies; - 14 - • any changes in research analysts’ coverage, recommendations or earnings estimates for us or for the stocks of other companies in our industry; • any sales of common stock by our directors, executive officers and our other large shareholders, particularly in light of the limited trading volume of our stock; • any merger, acquisition or divestiture activity that involves us or our competitors; and • other announcements or developments affecting us, our industry, customers, suppliers or competitors.
If any of our facilities or a significant amount of our rental equipment were to experience a catastrophic loss, it could disrupt our operations, delay orders, shipments and revenue recognition and result in expenses to repair or - 22 - replace the damaged rental equipment and facility not covered by insurance, which could have a material adverse effect on our results of operations.
If any of our facilities or a significant amount of our rental equipment were to experience a catastrophic loss, it could disrupt our operations, delay orders, shipments and revenue recognition and result in expenses to repair or replace the damaged rental equipment and facility not covered by insurance, which could have a material adverse effect on our results of operations.
Our failure to effectively remarket a large influx of units returning from leases could negatively affect our financial performance and our ability to continue expanding our - 25 - rental fleet. In addition, if returned units stay off rent for an extended period of time, we may incur additional costs to securely store and maintain them.
Our failure to effectively remarket a large influx of units returning from leases could negatively affect our financial performance and our ability to continue expanding our rental fleet. In addition, if returned units stay off rent for an extended period of time, we may incur additional costs to securely store and maintain them.
Impairment may result from significant changes in the manner of use of the acquired asset, negative industry or economic trends and significant underperformance relative to historic or projected operating results. - 20 - Our rental equipment is subject to residual value risk upon disposition and may not sell at the prices or in the quantities we expect.
Impairment may result from significant changes in the manner of use of the acquired asset, negative industry or economic trends and significant underperformance relative to historic or projected operating results. Our rental equipment is subject to residual value risk upon disposition and may not sell at the prices or in the quantities we expect.
Various states that we operate enacted laws and constitutional amendments to provide funding for school districts to limit the number of students that may be grouped in a single classroom. School districts with class sizes in excess of state limits have been and continue to be a significant source of our demand for modular classrooms.
Various states where we operate enacted laws and constitutional amendments to provide funding for school districts to limit the number of students that may be grouped in a single classroom. School districts with class sizes in excess of state limits have been and continue to be a significant source of our demand for modular classrooms.
Currently, total foreign country customers and operations account for less than 10% of the Company’s revenues. In recent years some of our customers have expanded their international operations faster than domestic operations, and this trend may continue. Over - 27 - time, the amount of our international business may increase if we focus on international market opportunities.
Currently, total foreign country customers and operations account for less than 10% of the Company’s revenues. In recent years some of our customers have expanded their international operations faster than domestic operations, and this trend may continue. Over time, the amount of our international business may increase if we focus on international market opportunities.
We compete on the basis of a number of factors, including equipment availability, quality, price, service, reliability, appearance, functionality and delivery terms. We may experience pricing pressures in our areas of operation in the future as some of our competitors seek to obtain market share by reducing prices.
We compete on the basis of a number of factors, including equipment and labor availability, quality, price, service, reliability, appearance, functionality and delivery terms. We may experience pricing pressures in our areas of operation in the future as some of our competitors seek to obtain market share by reducing prices.
Similar to conventionally constructed buildings, the modular building industry, including the manufacturers and lessors of portable classrooms, are subject to regulations by multiple governmental agencies at the federal, state and local level relating to environmental, zoning, health, safety, energy efficiency, labor and transportation matters, among other matters.
Similar to conventionally constructed buildings, the modular building industry, including the manufacturers and lessors of portable classrooms, are subject to regulations by multiple governmental agencies at the federal, state and local level relating to environmental, - 20 - zoning, health, safety, energy efficiency, labor and transportation matters, among other matters.
Failure to properly select, manage and respond to the technological needs of our customers and changes to our products through their technology life cycle may cause certain electronic test equipment to become obsolete, resulting in impairment charges, which may negatively impact operating results and cash flows.
Failure to properly select, manage and respond to - 23 - the technological needs of our customers and changes to our products through their technology life cycle may cause certain electronic test equipment to become obsolete, resulting in impairment charges, which may negatively impact operating results and cash flows.
Such proceedings are invariably expensive, regardless of the merit of the plaintiffs’ or prosecutors’ claims. We may be named as a defendant in the future, and there can be no assurance, irrespective of the merit of such future actions, that we will not be required to make substantial settlement payments in the future.
Such proceedings are - 18 - invariably expensive, regardless of the merit of the plaintiffs’ or prosecutors’ claims. We may be named as a defendant in the future, and there can be no assurance, irrespective of the merit of such future actions, that we will not be required to make substantial settlement payments in the future.
If we default on our indebtedness, our business financial condition and results of operations could be materially and adversely affected. The majority of our indebtedness is subject to variable interest rates, which makes us vulnerable to increases in interest rates, which could negatively affect our net income.
If we default on our indebtedness, our business financial condition and results of operations could be materially and adversely affected. - 19 - The majority of our indebtedness is subject to variable interest rates, which makes us vulnerable to increases in interest rates, which could negatively affect our net income.
As a result of these factors, our historical financial results are not necessarily indicative of our future results or stock price. - 17 - Our stock price has fluctuated and may continue to fluctuate in the future, which may result in a decline in the value of your investment in our common stock.
As a result of these factors, our historical financial results are not necessarily indicative of our future results or stock price. Our stock price has fluctuated and may continue to fluctuate in the future, which may result in a decline in the value of your investment in our common stock.
Upon detection, we promptly undertook steps - 18 - to address the incident, restored network systems and resumed normal operations. The attack did not result in any material disruption to our operations or ability to service our customers and did not affect our financial performance.
Upon detection, we promptly undertook steps to address the incident, restored network systems and resumed normal operations. The attack did not result in any material disruption to our operations or ability to service our customers and did not affect our financial performance.
We have provided disclosures about this new segment reporting structure, but there is no guarantee that investors or the market will understand this change to our financial reporting. There is also no guarantee that this change will have the desired effect.
We have provided disclosures about this new - 25 - segment reporting structure, but there is no guarantee that investors or the market will understand this change to our financial reporting. There is also no guarantee that this change will have the desired effect.
Thus, there can be no assurance that our efforts to protect our data and information technology systems will prevent future breaches in our systems (or that of our third-party providers).
Thus, there can be no assurance that our efforts to protect our data and information technology systems will prevent future breaches in our systems - 15 - (or that of our third-party providers).
RISKS RELATED TO OUR STRATEGY AND OPERATION: Our future operating results may fluctuate, fail to match past performance or fail to meet expectations, which may result in a decrease in our stock price. Our operating results may fluctuate in the future, may fail to match our past performance or fail to meet the expectations of analysts and investors.
RISKS RELATED TO OUR STRATEGY AND OPERATIONS: Our future operating results may fluctuate, fail to match past performance or fail to meet expectations, which may result in a decrease in our stock price. Our operating results may fluctuate in the future, may fail to match our past performance or fail to meet the expectations of analysts and investors.
Adverse macroeconomic conditions in the United States and globally, including inflation, slower than expected growth or recession, changes to fiscal and monetary policy, tightening of the credit markets, higher interest rates and currency fluctuations, could negatively impact our business, financial condition, results of operations and liquidity. These factors could negatively affect demand for our business.
Adverse macroeconomic conditions in the United States and globally, including inflation, cost increases from tariffs, slower than expected growth or recession, changes to fiscal and monetary policy, tightening of the credit markets, higher interest rates and currency fluctuations, could negatively impact our business, financial condition, results of operations and liquidity. These factors could negatively affect demand for our business.
We may not be able to quickly redeploy modular and container units returning from leases, which could negatively affect our financial performance and our ability to expand, or utilize, our rental fleet. As of December 31, 2023, 55% of our modular and 57% of our container portfolios had equipment on rent for periods exceeding the original committed term.
We may not be able to quickly redeploy modular and container units returning from leases, which could negatively affect our financial performance and our ability to expand, or utilize, our rental fleet. As of December 31, 2024, 63% of our modular and 57% of our container portfolios had equipment on rent for periods exceeding the original committed term.
Operating in foreign countries subjects the Company to additional risks, any of which may adversely impact our future operating results, including: • international political, economic and legal conditions including tariffs and trade barriers; • our ability to comply with customs, anti-corruption, import/export and other trade compliance regulations, together with any unexpected changes in such regulations; • greater difficulty in our ability to recover rental equipment and obtain payment of the related trade receivables; • additional costs to establish and maintain international subsidiaries and related operations; • difficulties in attracting and retaining staff and business partners to operate internationally; • language and cultural barriers; • seasonal reductions in business activities in the countries where our international customers are located; • difficulty with the integration of foreign operations; • longer payment cycles; • currency fluctuations; and • potential adverse tax consequences.
Operating in foreign countries subjects the Company to additional risks, any of which may adversely impact our future operating results, including: • international political, economic and legal conditions including political unrest and conflict, sanctions, tariffs and trade barriers; • our ability to comply with customs, anti-corruption, import/export and other trade compliance regulations, under U.S. and applicable foreign laws, together with any unexpected changes in such regulations; • greater difficulty in our ability to recover rental equipment and obtain payment of the related trade receivables; • additional costs to establish and maintain international subsidiaries and related operations; • difficulties in attracting and retaining staff and business partners to operate internationally; • language and cultural barriers; • seasonal reductions in business activities in the countries where our international customers are located; • difficulty with the integration of foreign operations; • longer payment cycles; • currency fluctuations; and • potential adverse tax consequences.
We believe that our success is directly linked to the competent people in our organization, including our executive officers, senior managers and other key personnel, and in particular, Joe Hanna, our Chief Executive Officer. Personnel turnover can be costly and could materially and adversely impact our operating results and can potentially jeopardize the success of our current strategic initiatives.
We believe that our success is directly linked to the competent people in our organization, including our executive officers, senior managers and other key personnel. Personnel turnover can be costly and could materially and adversely impact our operating results and can potentially jeopardize the success of our current strategic initiatives.
Any or all of these factors could negatively affect our revenue and could materially adversely affect our business, results of operations, financial condition and growth. Environmental, social and governance (ESG) matters may impact our business and reputation. Governmental authorities, non-governmental organizations, customers, investors, external stakeholders and employees are increasingly sensitive to ESG concerns.
Any or all of these factors could negatively affect our revenue and could materially adversely affect our business, results of operations, financial condition and growth. Environmental, social and governance (ESG) matters may impact our business and reputation. Governmental authorities, non-governmental organizations, customers, investors, external stakeholders and employees have sensitivities to ESG concerns.
If we determine that our goodwill and intangible assets have become impaired, we may incur impairment charges, which would negatively impact our operating results. At December 31, 2023, we had $387.8 million of goodwill and intangible assets, net, on our Consolidated Balance Sheets. Goodwill represents the excess of cost over the fair value of net assets acquired in business combinations.
If we determine that our goodwill and intangible assets have become impaired, we may incur impairment charges, which would negatively impact our operating results. At December 31, 2024, we had $377.6 million of goodwill and intangible assets, net, on our Consolidated Balance Sheets. Goodwill represents the excess of cost over the fair value of net assets acquired in business combinations.
Similarly, additional data privacy breaches by those who access our systems may pose a risk that sensitive data, including intellectual property, trade secrets or personal information belonging to us, our employees, customers or other business partners, may be exposed to unauthorized persons or to the public.
Similarly, additional data privacy breaches by those who access our systems may pose a risk that sensitive data, including intellectual property, trade secrets or personal information belonging to us, our employees, customers or other business partners, may be exposed to unauthorized persons or to the public. Any future breaches could subject us to reputational damage.
The modular building leasing industry is highly competitive in our states of operation and we expect it to remain so. The competitive market in which we operate may prevent us from raising rental fees or sales prices to pass any increased costs on to our customers.
The modular building and portable storage leasing industries are highly competitive in our states of operation and we expect it to remain so. The competitive market in which we operate may prevent us from raising rental fees or sales prices to pass any increased costs on to our customers.
We are subject to information technology system failures, network disruptions and breaches in data security which could subject us to liability, reputational damage or interrupt the operation of our business. We rely upon our information technology systems and infrastructure for our business.
We are subject to information technology system failures, network disruptions and breaches in data security which could subject us to liability, reputational damage or interrupt the operation of our business. We rely upon our information technology systems and infrastructure for our business. We sustained an immaterial cybersecurity attack in 2021.
With the exception of Enviroplex, none of the principal suppliers are affiliated with the Company. During 2023, Mobile Modular purchased 30% of its modular product from one manufacturer.
With the exception of Enviroplex, none of the principal suppliers are affiliated with the Company. During 2024, Mobile Modular purchased 18% of its modular product from one manufacturer.
These interest rate adjustments could cause periodic fluctuations in our operating results and cash flows. Our annual debt service obligations increase by approximately $5.9 million per year for each 1% increase in the average interest rate we pay based on the $588.0 million balance of variable rate debt outstanding at December 31, 2023.
These interest rate adjustments could cause periodic fluctuations in our operating results and cash flows. Our annual debt service obligations increase by approximately $4.2 million per year for each 1% increase in the average interest rate we pay based on the $415.4 million balance of variable rate debt outstanding at December 31, 2024.
Any reductions in funding available to the school districts from the states in which we do business may cause school districts to experience budget shortfalls and to reduce their demand for our products despite growing student populations, class size reduction initiatives and modernization and reconstruction project needs, which could reduce our revenues and operating income and consequently have a material adverse effect on the Company’s financial condition. - 23 - Public policies that create demand for our products and services may change, resulting in decreased demand for or the pricing of our products and services, which could negatively affect our revenues and operating income.
Any reductions in funding available to the school districts from the states in which we do business may cause school districts to experience budget shortfalls and to reduce their demand for our products despite growing student populations, class size reduction initiatives and modernization and reconstruction project needs, which could reduce our revenues and operating income and consequently have a material adverse effect on the Company’s financial condition.
Several aspects of our businesses involve risks of environmental and health and safety liability. For example, our operations involve the use of petroleum products, solvents and other hazardous substances in the construction and maintaining of modular buildings and for fueling and maintaining our delivery trucks and vehicles.
For example, our operations involve the use of petroleum products, solvents and other hazardous substances in the construction and maintaining of modular buildings and for fueling and maintaining our delivery trucks and vehicles.
A significant portion of the modular sale and rental revenues is derived from the educational market. Typically, during each calendar year, our 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.
Typically, during each calendar year, our 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.
These liabilities - 21 - can be imposed on the parties generating, transporting or disposing of such substances or on the owner or operator of any affected property, often without regard to whether the owner or operator knew of, or was responsible for, the presence of hazardous substances.
These liabilities can be imposed on the parties generating, transporting or disposing of such substances or on the owner or operator of any affected property, often without regard to whether the owner or operator knew of, or was responsible for, the presence of hazardous substances. Several aspects of our businesses involve risks of environmental and health and safety liability.
Macroeconomic weakness and uncertainty also make it more difficult for us to accurately forecast revenue, gross margin and expenses, and may make it more difficult to refinance debt. - 28 - Furthermore, sustained uncertainty about, or worsening of, geopolitical tensions, including further escalation of war between Russia and Ukraine, further escalation of trade tensions between the U.S. and China, escalation of tensions between China and Taiwan, further escalation in the conflict between the State of Israel and Hamas, as well as further escalation of tensions between the State of Israel and various countries in the Middle East and North Africa, could result in a global economic slowdown and long-term changes to global trade.
Furthermore, sustained uncertainty about, or worsening of, geopolitical tensions, including further escalation of war between Russia and Ukraine, further escalation of trade tensions between the U.S. and China, escalation of tensions between China and Taiwan, further escalation in the conflict between the State of Israel and Hamas, as well as further escalation of tensions between the State of Israel and various countries in the Middle East and North Africa, could result in a global economic slowdown and long-term changes to global trade.
In addition, any failure to comply with these laws and regulations might result in administrative penalties or even in the suspension of these contracts and as a result, the loss of the related revenues which would harm our business and results from operations. Seasonality of our educational business may have adverse consequences for our business.
In addition, any failure to comply with these laws and regulations might result in administrative penalties or even in the suspension of these contracts and as a result, the loss of the related revenues which would harm our business and results from operations. Expansions of our modular and portable storage operations into new markets may negatively affect our operating results.
This focus on ESG concerns may lead to new requirements that could result in increased costs for our business. Our ability to compete could also be affected by changing customer preferences and requirements, such as growing demand for more environmentally friendly products, supplier practices, or by failure to meet such customer expectations or demand.
Our ability to compete could also be affected by changing customer preferences and requirements, such as growing demand for more environmentally friendly products, supplier practices, or by failure to meet such customer expectations or demand.
The Company believes that the loss of any of its primary manufacturers of modulars could have an adverse effect on its operations since Mobile Modular could experience higher prices and longer delivery lead times for modular product until other manufacturers were able to increase their production capacity.
The Company believes that the loss of any of its primary manufacturers of modulars could have an adverse effect on its operations since Mobile Modular could experience higher prices and longer delivery lead times for modular product until other manufacturers were able to increase their production capacity. - 22 - Failure to properly design, manufacture, repair and maintain the modular product may result in impairment charges, potential litigation and reduction of our operating results and cash flows.
We anticipate that we will continue to consider acquisitions in the future that meet our strategic growth plans. We are unable to predict whether or when any prospective acquisition will be completed.
We have engaged in acquisitions and may engage in future acquisitions that could negatively impact our results of operations, financial condition and business. We anticipate that we will continue to consider acquisitions in the future that meet our strategic growth plans. We are unable to predict whether or when any prospective acquisition will be completed.
Expansion of our operations into new markets will require a significant amount of attention from our management, a commitment of financial resources and will require us to add qualified management in these markets, which may negatively impact our operating results. - 24 - We are subject to laws and regulations governing government contracts.
In addition, expansion into new markets may be affected by local economic and market conditions. Expansion of our operations into new markets will require a significant amount of - 21 - attention from our management, a commitment of financial resources and will require us to add qualified management in these markets, which may negatively impact our operating results.
If this should occur, we may not be able to secure necessary equipment from an alternative source on acceptable terms and our business and reputation may be materially and adversely affected. If we are not able to anticipate and mitigate the risks associated with operating internationally, there could be a material adverse effect on our operating results.
If this should occur, we may not be able to secure necessary equipment from an alternative source on acceptable terms and our business and reputation may be materially and adversely affected.
However, proper design, manufacture, repairs and maintenance of the products during our ownership is required for the product to reach their useful lives and residual values.
We estimate the useful life of the modular product to be 18 years with a residual value of 50% and containers to be 25 years with a residual value of 62.5%. However, proper design, manufacture, repairs and maintenance of the products during our ownership is required for the product to reach their useful lives and residual values.
Sales of our used rental equipment at prices that fall significantly below our projections or in lesser quantities than we anticipate will have a negative impact on our results of operations and cash flows.
Sales of our used rental equipment at prices that fall significantly below our projections or in lesser quantities than we anticipate will have a negative impact on our results of operations and cash flows. - 17 - If we do not effectively manage our credit risk, collect on our accounts receivable or recover our rental equipment from our customers’ sites, it could have a material adverse effect on our operating results.
Historically, these industries have been cyclical and have experienced periodic downturns, which can have a material - 26 - adverse impact on the industry’s demand for equipment, including our rental electronic test equipment.
Electronic test equipment rental and sales revenues are primarily affected by the business activity within these industries related to research and development, manufacturing, and communication infrastructure installation and maintenance. Historically, these industries have been cyclical and have experienced periodic downturns, which can have a material adverse impact on the industry’s demand for equipment, including our rental electronic test equipment.
Significant equipment returns may result in lower utilization until equipment can be redeployed or sold, which may cause rental rates to decline and negatively affect our revenues and operating income. Failure to comply with applicable regulations could harm our business and financial condition, resulting in lower operating results and cash flows.
Significant equipment returns may result in lower utilization until equipment can be redeployed or sold, which may cause rental rates to decline and negatively affect our revenues and operating income. Additionally, declining public school enrollment could lead to decreased demand for our products and services.
Acquisitions are inherently risky, and no assurance can be given that our recent and future acquisitions will be successful or will not adversely affect our business, operating results, or financial condition. The success of our acquisition strategy depends upon our ability to successfully complete acquisitions and integrate any businesses that we acquire into our existing business.
The success of our acquisition strategy depends upon our ability to successfully complete acquisitions and integrate any businesses that we acquire into our existing business.
We expend significant resources to minimize the risk of security breaches, including deploying additional personnel and protection technologies, training employees annually, and engaging third-party experts and contractors. Significant and increasing investments of time and resources by management and Board have been, and will continue to be, required to anticipate and address cybersecurity risks and incidents.
Significant and increasing investments of time and resources by management and Board have been, and will continue to be, required to anticipate and address cybersecurity risks and incidents.
If we are unable to pass these increased costs on to our customers, our profitability, operating cash flows and financial condition could be negatively impacted. Expansions of our modular and portable storage operations into new markets may negatively affect our operating results. In the past we have expanded our modular and portable storage operations into new geographies and states.
If we are unable to pass these increased costs on to our customers, our profitability, operating cash flows and financial condition could be negatively impacted. We are subject to laws and regulations governing government contracts.
The immaterial breach of our information technology system that we suffered in 2021 and any future breaches could subject us to reputational damage. Cyber-attacks are increasing in their frequency, sophistication and intensity, and have become increasingly difficult to detect.
Cyber-attacks are increasing in their frequency, sophistication and intensity, and have become increasingly difficult to detect. We expend significant resources to minimize the risk of security breaches, including deploying additional personnel and protection technologies, training employees annually, and engaging third-party experts and contractors.
Removed
RISKS RELATED TO THE PROPOSED ACQUISITION BY WILLSCOT MOBILE MINI: There are material uncertainties and risks associated with the proposed Transaction, including the timing of the consummation of the Transaction, which may adversely affect our business and ongoing operations, financial condition and results of operations, employees, customers, shareholders, other parties and business prospects, and a failure to complete the Transaction on the terms reflected in the Merger Agreement, if at all, could have a material and adverse effect on our business, financial condition, results of operations, cash flows and stock price. • The announcement and pendency of the proposed Transaction may adversely affect our business, financial condition and results of operations. • On January 28, 2024, we entered into the Merger Agreement with WillScot Mobile Mini.
Added
Public policies that create demand for our products and services may change, resulting in decreased demand for or the pricing of our products and services, which could negatively affect our revenues and operating income.
Removed
Uncertainty about the effect of the proposed Transaction on our employees, customers, shareholders and other parties may have an adverse effect on our business, financial condition and results of operation regardless of whether the proposed Transaction is completed.
Added
Our business is subject to various federal, state and local laws and regulations, which can change from time to time, governing construction, environmental health and safety, labor and employment, government contracts, transportation, immigration, anti-corruption, anti-trust and privacy, among others.
Removed
The risks to our business include the following, all of which could be exacerbated by a delay in the completion of the proposed Transaction: • the impairment of our ability to attract, retain, and motivate our employees, including key personnel; • the diversion of significant management time and resources towards the completion of the proposed Transaction; • difficulties maintaining relationships with customers, suppliers, and other business partners; • delays or deferments of certain business decisions by our customers, suppliers, and other business partners; • the inability to pursue alternative business opportunities or make appropriate changes to our business because the Merger Agreement requires us to use reasonable best efforts to conduct our business in the ordinary course of business and not engage in certain kinds of transactions prior to the completion of the proposed Transaction; • litigation relating to the proposed Transaction and the costs related thereto; and • the incurrence of significant costs, expenses, and fees for professional services and other transaction costs in connection with the proposed Transaction.
Added
Failure to comply with applicable laws and regulations could harm our business and financial condition, resulting in lower operating results and cash flows.
Removed
Additionally, in approving the Merger Agreement, our Board of Directors considered a number of factors and potential benefits, including the fact that the Transaction consideration to be received by holders of our common stock represented an approximate 10% premium over the Company’s closing stock price of $111.75 on January 26, 2024, the last full trading day prior to the announcement of the proposed Transaction.
Added
In the past we have expanded our modular and portable storage operations into new geographies and states.
Removed
If the Transaction is not completed, neither we nor the holders of our common stock may realize this benefit of the Transaction. • Failure to consummate the proposed Transaction within the expected timeframe or at all could have a material adverse impact on our business, financial condition and results of operations.
Added
Seasonality of our educational business may have adverse consequences for our modular building business. A significant portion of the modular sale and rental revenues is derived from the educational market.
Removed
There can be no assurance that the proposed Transaction will be consummated. The consummation of the proposed Transaction is subject to certain regulatory approvals and customary closing conditions.
Added
Our business is subject to various federal, state and local laws and regulations, in each of the jurisdictions in which we conduct business within the U.S. and internationally, related to government contracts, immigration, export control, anti-corruption, anti-trust, privacy, environmental health and safety, labor and employment, among others.
Removed
The obligation of each party to consummate the Transaction is also conditioned upon the other party’s representations and warranties being true and correct to the extent specified in the Merger Agreement and the other party having performed in all material respects its obligations under the Merger Agreement.
Added
Failure to comply with applicable laws and regulations could harm our business and financial condition, resulting in lower operating results and cash flows. More specifically, if we are not able to anticipate and mitigate the risks associated with operating internationally, there could be a material adverse effect on our operating results.
Removed
There can be no assurance that these and other conditions to closing will be satisfied in a timely manner or at all.
Added
Macroeconomic weakness and uncertainty also make it more difficult for us to accurately forecast revenue, gross margin and expenses, and may make it more difficult to refinance debt.
Removed
The Merger Agreement also includes customary termination provisions for both the Company and WillScot Mobile Mini, and we may be required to pay WillScot Mobile Mini a termination fee equal to $120 million in certain specified circumstances, including, among other circumstances, if WillScot Mobile Mini terminates the Merger Agreement following a Company Adverse Recommendation Change prior to receipt of Company Shareholder Approval (each as defined in the Merger Agreement) or (ii) the Company terminates the Merger Agreement to enter into an alternative acquisition agreement in respect of a Superior Proposal (as defined in the Merger Agreement).
Removed
If we are required to make this payment, doing so may materially adversely affect our business, financial condition and results of operations. - 15 - There can be no assurance that a remedy will be available to us in the event of a breach of the Merger Agreement by WillScot Mobile Mini or its affiliates or that we will wholly or partially recover for any damages incurred by us in connection with the proposed Transaction.
Removed
A failed transaction may result in negative publicity and a negative impression of us among our customers or in the investment community or business community generally.
Removed
Furthermore, any disruptions to our business resulting from the announcement and pendency of the proposed Transaction, including any adverse changes in our relationships with our customers, partners, suppliers and employees, could continue or accelerate in the event of a failed transaction.
Removed
In addition, if the proposed Transaction is not completed, and there are no other parties willing and able to acquire the Company at a price of $123.00 per share or higher, on terms acceptable to us, the share price of our common stock will likely decline to the extent that the current market price of our common stock reflects an assumption that the proposed Transaction will be completed.
Removed
Also, we have incurred, and will continue to incur, significant costs, expenses and fees for professional services and other transaction costs in connection with the proposed Transaction, for which we will have received little or no benefit if the proposed Transaction is not completed.
Removed
Many of these fees and costs will be payable by us even if the proposed Transaction is not completed and may relate to activities that we would not have undertaken other than to complete the proposed Transaction. • Prior to the completion of the Transaction or the termination of the Merger Agreement in accordance with its terms, we are prohibited from entering into certain transactions and taking certain actions that might otherwise be beneficial to us and our shareholders.
Removed
After the date of the Merger Agreement and prior to the Effective Time, the Merger Agreement restricts us from taking specified actions without the consent of WillScot Mobile Mini (which consent may not be unreasonably withheld, conditioned or delayed) and requires that our business be conducted in all material respects in the ordinary course of business.
Removed
These restrictions may prevent us from making appropriate changes to our businesses or organizational structures or from pursuing attractive business opportunities that may arise prior to the completion of the Transaction and could have the effect of delaying or preventing other strategic transactions.
Removed
Adverse effects arising from the pendency of the Transaction could be exacerbated by any delays in consummation of the Transaction or termination of the Merger Agreement. • The Transaction, including uncertainty regarding the Transaction, may cause customers, suppliers, distributors or strategic partners to delay or defer decisions, which could negatively affect our business and adversely affect our ability to effectively manage our business.
Removed
The Transaction will be consummated only if certain conditions are met. Many of the conditions are outside of our control, and both we and WillScot Mobile Mini also have the right to terminate the Merger Agreement in certain circumstances. Accordingly, there may be uncertainty regarding the completion of the Transaction.
Removed
This uncertainty may cause customers, suppliers, distributors, strategic partners or others that deal with us to delay or defer entering into contracts with us or making other decisions concerning us or seek to change or cancel existing business relationships, which could negatively affect our business.
Removed
Any delay or deferral of those decisions or changes in existing agreements could have a material adverse effect on our business, regardless of whether the Transaction is ultimately completed. • The Transaction may cause difficulty in attracting, motivating and retaining employees.
Removed
Our current and prospective employees may experience uncertainty about their future role with the Company until strategies with regard to these employees are announced or executed, which may impair our ability to attract, retain and motivate key management, operational and customer-facing employees and other personnel prior to the Transaction.
Removed
If we are unable to retain and replace personnel, we could face disruptions in our operations, loss of existing customers, loss of key information, expertise or know-how, and unanticipated additional recruitment and training costs. • The Merger Agreement limits our ability to pursue alternatives to the Transaction and may discourage other companies from trying to acquire us for greater consideration than what WillScot Mobile Mini has agreed to pay.
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Item 1C. Cybersecurity
Cybersecurity — threats and controls disclosure
9 edited+1 added−2 removed6 unchanged
Item 1C. Cybersecurity
Cybersecurity — threats and controls disclosure
9 edited+1 added−2 removed6 unchanged
2023 filing
2024 filing
Biggest changeThe - 30 - Company’s General Counsel, as part of the Incident Response Team, will report any credible threats or security concerns to the Board when appropriate.
Biggest changeThe Company’s General Counsel, as part of the Incident Response Team, will report any material cybersecurity incidents to the Board when appropriate.
Risk Management and Strategy The Company’s cybersecurity program focuses on the following areas: • Vigilance: The Company maintains cybersecurity threat operations with the goal of identifying, preventing and mitigating cybersecurity threats and responding to cybersecurity incidents in accordance with our established incident response and recovery plans. • Systems Safeguards: The Company deploys systems safeguards that are designed to protect the Company’s information systems from cybersecurity threats, including firewalls, intrusion prevention and detection systems, anti-malware functionality and access controls, which are evaluated and improved through ongoing vulnerability assessments and cybersecurity threat intelligence. - 29 - • Collaboration: The Company utilizes collaboration mechanisms established with public and private entities, including intelligence and enforcement agencies, industry groups and third-party service providers, to identify, assess and respond to cybersecurity risks. • Third-Party Risk Management: The Company endeavors to identify and oversee cybersecurity risks presented by third parties as well as the systems of third parties that could adversely impact our business in the event of a cybersecurity incident affecting those third-party systems. • Training: The Company provides periodic training and testing for personnel regarding cybersecurity threats, which reinforce the Company’s information security policies, standards and practices. • Incident Response and Recovery Planning: The Company has established and maintains incident response and recovery plans that address the Company’s response to a cybersecurity incident and the recovery from a cybersecurity incident; such plans are tested and evaluated periodically. • Communication, Coordination and Disclosure: The Company utilizes a cross-functional approach to address the risk from cybersecurity threats, involving management personnel from the Company’s technology, operations, legal, risk management, and other key business functions, as well as the members of the Board in an ongoing dialogue regarding cybersecurity threats and incidents, while also implementing controls and procedures for the escalation of cybersecurity incidents pursuant to established thresholds so that decisions regarding the disclosure and reporting of such incidents can be made by management in a timely manner. • Governance: The Board’s oversight of cybersecurity risk management is supported by the Company’s executive leadership team and cybersecurity Steering Committee, which regularly interacts with the Company’s Vice President of Information Technology and other members of the cyber team and management.
Risk Management and Strategy The Company’s cybersecurity program focuses on the following areas: • Vigilance: The Company maintains cybersecurity threat operations with the goal of identifying, preventing and mitigating cybersecurity threats and responding to cybersecurity incidents in accordance with our established incident response and recovery plans. • Systems Safeguards: The Company deploys systems safeguards that are designed to protect the Company’s information systems from cybersecurity threats, including firewalls, intrusion prevention and detection systems, anti-malware functionality and access controls, which are evaluated and improved through ongoing vulnerability assessments and cybersecurity threat intelligence. • Collaboration: The Company utilizes collaboration mechanisms established with public and private entities, including intelligence and enforcement agencies, industry groups and third-party service providers, to identify, assess and respond to cybersecurity risks. • Third-Party Risk Management: The Company endeavors to identify and oversee cybersecurity risks presented by third parties as well as the systems of third parties that could adversely impact our business in the event of a cybersecurity incident affecting those third-party systems. • Training: The Company provides periodic training and testing for personnel regarding cybersecurity threats, which reinforce the Company’s information security policies, standards and practices. • Incident Response and Recovery Planning: The Company has established and maintains incident response and recovery plans that address the Company’s response to a cybersecurity incident and the recovery from a cybersecurity incident; such plans are tested and evaluated periodically. • Communication, Coordination and Disclosure: The Company utilizes a cross-functional approach to address the risk from cybersecurity threats, involving management personnel from the Company’s technology, operations, legal, risk management, and other key business functions, as well as the members of the Board in an ongoing dialogue regarding cybersecurity threats and incidents, while also implementing controls and procedures for the escalation of cybersecurity incidents pursuant to established thresholds so that decisions regarding the disclosure and reporting of such incidents can be made by management in a timely manner. • Governance: The Board’s oversight of cybersecurity risk management is supported by the Company’s executive leadership team and Cybersecurity Steering Committee, which regularly interacts with the Company’s Vice President of Information Technology and other members of the cyber team and management.
Governance The Board oversees the management of risks from cybersecurity threats, including the policies, standards, processes and practices that the Company’s management implements to address risks from cybersecurity threats. The Board receives reports on the Company’s technology and cybersecurity functions, including vulnerability assessments, any third-party and independent reviews, the threat environment, and other information security considerations.
Governance The Board oversees the effectiveness of the Company's management of risks from cybersecurity threats, including the policies, standards, processes and practices that the Company’s management implements to address risks from cybersecurity threats. The Board receives reports on the Company’s technology and cybersecurity functions, including vulnerability assessments, any third-party and independent reviews, the threat environment, and other information security considerations.
The Company manages risks from cybersecurity threats through the assessment and testing of the Company’s processes and practices focused on evaluating the effectiveness of our cybersecurity measures. The Company engages a third-party independent cybersecurity company that provides security testing and monitoring, including penetration testing, auditing, and security assessment, for the Company.
The Company manages risks from cybersecurity threats through the assessment and testing of the Company’s processes and practices focused on evaluating the effectiveness of our cybersecurity measures. The Company engages a third-party independent - 26 - cybersecurity company that provides security testing and monitoring, including penetration testing, auditing, and security assessment, for the Company.
The cyber security Steering Committee meets multiple times throughout the year to discuss the Company’s cyber security programs and practices, risk management related to cyber security and a wide range of other related topics including, for example, recent developments, evolving standards, vulnerability assessments, third-party and independent reviews, the threat environment, technological trends and information security considerations arising with respect to the Company’s peers and third parties.
The Cybersecurity Steering Committee meets multiple times throughout the year to discuss the Company’s cybersecurity programs and practices, risk management related to cybersecurity and a wide range of other related topics including, for example, recent developments, evolving standards, vulnerability assessments, third-party and independent reviews, the threat environment, technological trends and information security considerations arising with respect to the Company’s peers and third parties.
As of the date of this Annual Report on Form 10-K, we are not aware of any cybersecurity threats that have materially affected or are reasonably likely to affect the Company, including its business strategy, results of operations, or financial condition.
As of the date of this Annual Report on Form 10-K, we are not aware of any cybersecurity incidents that have materially affected or are reasonably likely to affect the Company, including its business strategy, results of operations, or financial condition.
The results of such assessments and reviews are reported as part of the technology and cyber security update to the Company’s executive leadership team and the Board, and the Company adjusts its cybersecurity policies, standards, processes and practices as necessary based on the information provided by the assessments, audits and reviews.
The results of such assessments and reviews are reported as part of the technology and cybersecurity update to the Company’s executive leadership team and the Board, and the Company adjusts its cybersecurity policies, standards, processes and practices as necessary based on the information provided by the assessments, audits and reviews.
To facilitate the success of this program, multidisciplinary teams throughout the Company are created and deployed to address cybersecurity threats and to respond to cybersecurity incidents in accordance with the Company’s Incident Response Plans (IRP). Through the ongoing communications from these teams, the Steering committee monitors the effectiveness of the prevention, detection, mitigation and remediation within the cybersecurity program.
To facilitate the success of this program, multidisciplinary teams throughout the Company are created and deployed to address cybersecurity threats and to respond to cybersecurity incidents in accordance with the Company’s Incident Response Plan. Through the ongoing communications from these teams, the Cybersecurity Steering Committee monitors effectiveness of the prevention, detection, mitigation and remediation within the cybersecurity program.
The Company’s VP of Information Technology has served in various roles in technology and is supported by a team of information technology and cyber security professionals with decades of relevant experience.
The Company’s VP of Information Technology has served in various roles in technology and is supported by a team of information technology and cybersecurity professionals with decades of relevant experience.
Removed
The Board also receives prompt and timely information regarding any cybersecurity incident that meets established reporting thresholds, as well as ongoing updates regarding such incident until it has been addressed.
Added
The Board also receives on a regular basis information and updates regarding cybersecurity matters.
Removed
Most notably, the Company’s Enterprise Manager of Cybersecurity and Network holds a Certified Information Systems Security Professional (CISSP) certification and has over 15 years of experience with managing risks arising from cybersecurity threats.
Item 2. Properties
Properties — owned and leased real estate
3 edited+1 added−1 removed0 unchanged
Item 2. Properties
Properties — owned and leased real estate
3 edited+1 added−1 removed0 unchanged
2023 filing
2024 filing
Biggest changeThe inventory centers conduct rental and sales operations from modular buildings, serving as working models of the Company’s modular product. TRS-RenTelco – Electronic test equipment rental and sales operations are conducted from a 117,000 square foot leased facility in Grapevine, Texas (Dallas area) and a sales office in Dollard-des-Ormeaux, Quebec (Montreal, Canada area).
Biggest changeTRS-RenTelco – Electronic test equipment rental and sales operations are conducted from a 117,000 square foot leased facility in Grapevine, Texas (Dallas area) and a sales office in Dollard-des-Ormeaux, Quebec (Montreal, Canada area). - 27 - Enviroplex – The Company’s wholly owned subsidiary, Enviroplex, manufactures modular buildings used primarily as classrooms in California from its own 108,000 square foot facility in Stockton, California (San Francisco Bay Area).
ITEM 2. PROPERTIES. The Company’s corporate and administrative offices are located in Livermore, California in approximately 26,000 square feet. At December 31, 2023, the Company’s four reportable business segments conducted operations from the following locations: Mobile Modular and Portable Storage – Mobile Modular and Portable Storage operate from 22 owned and 60 leased locations.
ITEM 2. PROPERTIES. The Company’s corporate and administrative offices are located in Livermore, California in approximately 26,000 square feet. At December 31, 2024, the Company’s four reportable business segments conducted operations from the following locations: Mobile Modular and Portable Storage – Mobile Modular and Portable Storage operate from 26 owned and 54 leased locations.
Our largest owned facilities include seven inventory centers, at which relocatable modular buildings and storage containers are displayed, refurbished and stored: Livermore, California (140 acres in the San Francisco Bay Area), Mira Loma, California (82 acres in the Los Angeles area), Pasadena, Texas (50 acres in the Houston area), Grand Prairie, Texas (30 acres in the Dallas area), Auburndale, Florida (123 acres in the Orlando area), Arcade, Georgia (48 acres in the Atlanta area), Fredericksburg, Virginia (68 acres in the Washington D.C. area).
Our largest owned facilities include eight inventory centers, at which relocatable modular buildings and storage containers are displayed, refurbished and stored: Livermore, California (140 acres in the San Francisco Bay Area), Mira Loma, California (82 acres in the Los Angeles area), Pasadena, Texas (50 acres in the Houston area), Grand Prairie, Texas (30 acres in the Dallas area), Auburndale, Florida (123 acres in the Orlando area), Arcade, Georgia (48 acres in the Atlanta area), Fredericksburg, Virginia (68 acres in the Washington D.C. area), Concord, North Carolina (74 acres in the Charlotte N.C. area).
Removed
Enviroplex – The Company’s wholly owned subsidiary, Enviroplex, manufactures modular buildings used primarily as classrooms in California from its 108,000 square foot facility in Stockton, California (San Francisco Bay Area).
Added
The inventory centers conduct rental and sales operations from modular buildings, serving as working models of the Company’s modular product.
Item 5. Market for Registrant's Common Equity
Market for Common Equity — stock, dividends, buybacks
5 edited+1 added−0 removed1 unchanged
Item 5. Market for Registrant's Common Equity
Market for Common Equity — stock, dividends, buybacks
5 edited+1 added−0 removed1 unchanged
2023 filing
2024 filing
Biggest changeIn August 2015, the Company’s Board of Directors authorized the Company to - 31 - repurchase 2,000,000 shares of the Company's outstanding common stock (the “Repurchase Plan”). The amount and time of the specific repurchases are subject to prevailing market conditions, applicable legal requirements and other factors, including management’s discretion.
Biggest changeThe amount and time of the specific repurchases are subject to prevailing market conditions, applicable legal requirements and other factors, including management’s discretion. All shares repurchased by the Company are canceled and returned to the status of authorized but unissued shares of common stock.
Stock Repurchase Plan The Company has in the past made purchases of shares of its common stock from time to time in over-the-counter market (NASDAQ) transactions, through privately negotiated, large block transactions and through a share repurchase plan, in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934.
The Company has in the past made purchases of shares of its common stock from time to time in over-the-counter market (NASDAQ) transactions, through privately negotiated, large block transactions and through a share repurchase plan, in accordance with Rule 10b5-1 of the Exchange Act.
As of February 21, 2024, the Company's common stock was held by approximately 45 shareholders of record, which does not include shareholders whose shares are held in street or nominee name. The Company believes that when holders in street or nominee name are added, the number of holders of the Company's common stock exceeds 500.
As of February 19, 2025, the Company's common stock was held by approximately 46 shareholders of record, which does not include shareholders whose shares are held in street or nominee name. The Company believes that when holders in street or nominee name are added, the number of holders of the Company's common stock exceeds 500.
All shares repurchased by the Company are canceled and returned to the status of authorized but unissued shares of common stock. There can be no assurance that any authorized shares will be repurchased and the repurchase program may be modified, extended or terminated by the Board of Directors at any time.
There can be no assurance that any authorized shares will be repurchased, and the Repurchase Plan may be modified, extended or terminated by the Company’s Board of Directors at any time. There were no shares repurchased during the three and twelve months ended December 31, 2024 and 2023.
There were no shares of common stock repurchased during the twelve months ended December 31, 2023 and 2022. As of December 31, 2023, 1,309,805 shares remain authorized for repurchase under the Repurchase Plan.
As of December 31, 2024, 2,000,000 shares were authorized for repurchase under the Repurchase Plan. There were no repurchases of our common stock for the quarter ended December 31, 2024.
Added
In September 2024, the Company's Board of Directors increased the capacity under the share repurchase program by authorizing the Company to repurchase up to 2,000,000 shares of the Company's outstanding common stock (the "Repurchase Plan"), an increase from the 1,309,805 remaining shares authorized for repurchase under the Repurchase Plan established in August 2015.
Item 7. Management's Discussion & Analysis
Management's Discussion & Analysis (MD&A) — revenue / margin commentary
109 edited+36 added−25 removed92 unchanged
Item 7. Management's Discussion & Analysis
Management's Discussion & Analysis (MD&A) — revenue / margin commentary
109 edited+36 added−25 removed92 unchanged
2023 filing
2024 filing
Biggest changeDividends In February 2024, the Company announced that its Board of Directors declared a cash dividend of $0.475 per common share for the quarter ending March 31, 2024, an increase of 2% over the prior year’s comparable quarter. - 34 - Percentage of Revenue Table The following table sets forth for the periods indicated the results of operations as a percentage of the Company’s total revenues from continuing operations and the percentage of changes in the amount of such items as compared to the amount in the indicated prior period: Percent of Total Revenues Percent Change Three Years Year Ended December 31, 2023 over 2022 over 2023–2021 2023 2022 2021 2022 2021 Revenues Rental 60 % 57 % 61 % 62 % 22 % 17 % Rental related services 16 17 15 14 45 26 Rental operations 76 74 76 76 26 18 Sales 23 25 23 23 40 21 Other 1 1 1 1 267 7 Total revenues 100 100 100 100 31 19 Costs and expenses Direct costs of rental operations Depreciation of rental equipment 12 11 13 14 11 7 Rental related services 11 12 11 10 40 24 Other 15 13 16 15 10 31 Total direct costs of rental operations 38 36 40 39 18 20 Cost of sales 15 17 14 14 50 20 Total costs 53 53 54 53 27 20 Gross profit 47 47 46 47 36 17 Selling and administrative expenses 24 25 22 23 45 16 Other income — — — — 100 0 Income from operations 23 23 24 24 29 19 Interest expense 3 5 2 2 232 48 Income from continuing operations before provision for income taxes 20 18 22 22 11 16 Provision for income taxes from continuing operations 5 5 5 6 20 2 Income from continuing operations 15 % 13 % 17 % 16 % 8 % 21 % 1.
Biggest changePercentage of Revenue Table The following table sets forth for the periods indicated the results of operations as a percentage of the Company’s total revenues from continuing operations and the percentage of changes in the amount of such items as compared to the amount in the indicated prior period: Percent of Total Revenues Percent Change Three Years Year Ended December 31, 2024 over 2023 over 2024–2022 2024 2023 2022 2023 2022 Revenues Rental 57 % 54 % 57 % 61 % 3 % 22 % Rental related services 17 16 17 15 7 45 Rental operations 74 70 74 76 4 26 Sales 25 29 25 23 27 40 Other 1 1 1 1 nm nm Total revenues 100 100 100 100 10 31 Costs and expenses Direct costs of rental operations Depreciation of rental equipment 11 11 11 13 — 11 Rental related services 11 11 12 11 7 40 Other 14 11 13 16 (5 ) 10 Total direct costs of rental operations 36 33 36 40 0 18 Cost of sales 17 19 17 14 27 50 Total costs 53 52 53 54 9 27 Gross profit 47 48 47 46 11 36 Selling and administrative expenses 23 22 25 22 (3 ) 45 Other income 1 1 — — 157 100 Income from operations 24 27 23 24 29 29 Interest expense 4 5 5 2 16 232 Gain on merger termination from WillScot Mobile Mini, net of transaction costs 5 13 — — 100 — Income from continuing operations before provision for income taxes 25 34 18 22 110 11 Provision for income taxes from continuing operations 6 9 5 5 118 20 Income from continuing operations 19 % 25 % 13 % 17 % 107 % 8 % nm = Not meaningful - 30 - Twelve Months Ended December 31, 2024 Compared to Twelve Months Ended December 31, 2023 Overview Consolidated revenues in 2024 increased 8% to $910.9 million, from $841.3 million in 2023.
Earnings per diluted share from discontinued operations for the year ended December 31, 2023 was $2.56, compared to $0.48 for the same period in 2022. For additional information on discontinued operations and the divestiture of Adler Tanks, refer to Note 5 of the consolidated financial statements.
Earnings per diluted share from discontinued operations for the year ended December 31, 2023 was $2.56, compared to $0.48 for the same period in 2022. For additional information on discontinued operations and the divestiture of Adler Tanks, refer to Note 5 to the consolidated financial statements.
Average and Period end rental equipment represents the cost of rental equipment excluding new equipment inventory and accessory equipment. 2. Average monthly total yield is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment for the period. 3.
Average and Period end rental equipment represents the cost of rental equipment excluding new equipment inventory and accessory equipment. 2. Average monthly total yield is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment for the period. 3.
Period end utilization is calculated by dividing the cost of rental equipment on rent by the total cost of rental equipment excluding new equipment inventory and accessory equipment. Average utilization for the period is calculated using the average month end costs of the rental equipment. 4.
Period end utilization is calculated by dividing the cost of rental equipment on rent by the total cost of rental equipment excluding new equipment inventory and accessory equipment. Average utilization for the period is calculated using the average month end costs of the rental equipment. 4.
Adjusted EBITDA is a non-GAAP financial measure and is defined as net income before interest expense, provision for income taxes, depreciation, amortization, non-cash impairment costs, share-based compensation and transaction costs.
Adjusted EBITDA is a non-GAAP financial measure and is defined as net income before interest expense, provision for income taxes, depreciation, amortization, non-cash impairment costs, share-based compensation and transaction costs.
Period end utilization is calculated by dividing the cost of rental equipment on rent by the total cost of rental equipment excluding accessory equipment. Average utilization for the period is calculated using the average month end costs of the rental equipment. 4.
Period end utilization is calculated by dividing the cost of rental equipment on rent by the total cost of rental equipment excluding accessory equipment. Average utilization for the period is calculated using the average month end costs of the rental equipment. 4.
Average and Period end rental equipment represents the cost of rental equipment excluding new inventory and accessory equipment. 2. Average monthly total yield is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment for the period. 3.
Average and Period end rental equipment represents the cost of rental equipment excluding new inventory and accessory equipment. 2. Average monthly total yield is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment for the period. 3.
Period end utilization is calculated by dividing the cost of rental equipment on rent by the total cost of rental equipment excluding accessory equipment. Average utilization for the period is calculated using the average month end costs of the rental equipment. 4.
Period end utilization is calculated by dividing the cost of rental equipment on rent by the total cost of rental equipment excluding accessory equipment. Average utilization for the period is calculated using the average month end costs of the rental equipment. 4.
(“PGIM”) and the holders of Series D and Series E Notes previously issued pursuant to the Prior Amended and Restated NPA, among the Company and the other parties to the Note Purchase Agreement. The Note Purchase Agreement amended and restated, and superseded in its entirety, the Prior NPA.
(“PGIM”) and the holders of Series D and Series E Notes previously issued pursuant to the Prior Amended and Restated Note Purchase Agreement, among the Company and the other parties to the Note Purchase Agreement. The Note Purchase Agreement amended and restated, and superseded in its entirety, the Prior NPA.
Portable Storage – 2023 compared to 2022 (dollar amounts in thousands) Year Ended December 31, Increase (Decrease) 2023 2022 $ % Revenues Rental $ 74,536 $ 62,218 $ 12,318 20 % Rental related services 20,510 17,095 3,415 20 % Rental operations 95,046 79,313 15,733 20 % Sales 4,587 2,933 1,654 56 % Other 1,504 260 1,244 nm Total revenues 101,137 82,506 18,631 23 % Costs and Expenses Direct costs of rental operations: Depreciation of rental equipment 3,514 2,799 715 26 % Rental related services 18,568 16,344 2,224 14 % Other 7,317 6,212 1,105 18 % Total direct costs of rental operations 29,399 25,355 4,044 16 % Costs of sales 2,858 1,849 1,009 55 % Total costs of revenues 32,257 27,204 5,053 19 % Gross Profit Rental 63,705 53,207 10,498 20 % Rental related services 1,942 750 1,192 nm Rental operations 65,647 53,957 11,690 22 % Sales 1,729 1,084 645 60 % Other 1,504 260 1,244 nm Total gross profit 68,880 55,302 13,578 25 % Selling and administrative expenses (31,537 ) (24,465 ) 7,072 29 % Other income 457 — 457 nm Income from operations 37,800 30,837 6,963 23 % Interest expense allocation (4,950 ) (1,518 ) 3,432 nm Pre-tax income $ 32,850 $ 29,319 $ 3,531 12 % Other Selected Information Adjusted EBITDA $ 47,147 $ 37,393 $ 9,754 26 % Average rental equipment 1 $ 206,095 $ 169,997 $ 36,098 21 % Average rental equipment on rent $ 159,391 $ 144,133 $ 15,258 11 % Average monthly total yield 2 3.01 % 3.05 % (1 )% Average utilization 3 77.3 % 84.8 % (9 )% Average monthly rental rate 4 3.90 % 3.60 % 8 % Period end rental equipment 1 $ 221,817 $ 184,919 $ 36,898 20 % Period end utilization 3 71.5 % 82.6 % (13 )% 1.
Portable Storage – 2023 compared to 2022 (dollar amounts in thousands) Year Ended December 31, Increase (Decrease) 2023 2022 $ % Revenues Rental $ 74,536 $ 62,218 $ 12,318 20 % Rental related services 20,510 17,095 3,415 20 % Rental operations 95,046 79,313 15,733 20 % Sales 4,587 2,933 1,654 56 % Other 1,504 260 1,244 nm Total revenues 101,137 82,506 18,631 23 % Costs and Expenses Direct costs of rental operations: Depreciation of rental equipment 3,514 2,799 715 26 % Rental related services 18,568 16,344 2,224 14 % Other 7,317 6,212 1,105 18 % Total direct costs of rental operations 29,399 25,355 4,044 16 % Costs of sales 2,858 1,849 1,009 55 % Total costs of revenues 32,257 27,204 5,053 19 % Gross Profit Rental 63,705 53,207 10,498 20 % Rental related services 1,942 750 1,192 nm Rental operations 65,647 53,957 11,690 22 % Sales 1,729 1,084 645 60 % Other 1,504 260 1,244 nm Total gross profit 68,880 55,302 13,578 25 % Selling and administrative expenses 31,537 24,465 7,072 29 % Other income (457 ) — 457 nm Income from operations 37,800 30,837 6,963 23 % Interest expense allocation 4,950 1,518 3,432 nm Pre-tax income $ 32,850 $ 29,319 $ 3,531 12 % Other Selected Information Adjusted EBITDA $ 46,690 $ 37,393 $ 9,297 25 % Average rental equipment 1 $ 206,095 $ 169,997 $ 36,098 21 % Average rental equipment on rent $ 159,391 $ 144,133 $ 15,258 11 % Average monthly total yield 2 3.01 % 3.05 % (1 )% Average utilization 3 77.3 % 84.8 % (9 )% Average monthly rental rate 4 3.90 % 3.60 % 8 % Period end rental equipment 1 $ 221,817 $ 184,919 $ 36,898 20 % Period end utilization 3 71.5 % 82.6 % (13 )% 1.
Shelf Notes may be issued and sold from time to time at the discretion of the Company’s Board of Directors and in such amounts as the Board of Directors may determine, subject to prospective purchasers’ agreement to purchase the Shelf Notes. The Company will sell the Shelf Notes directly to such - 51 - purchasers.
Shelf Notes may be issued and sold from time to time at the discretion of the Company’s Board of Directors and in such amounts as the Board of Directors may determine, subject to prospective purchasers’ agreement to purchase the Shelf Notes. The Company will sell the Shelf Notes directly to such purchasers.
Revenue from contracts that satisfy the criteria for over-time recognition - 54 - are recognized as work is performed by using the input method based on the ratio of costs incurred to estimated total contract costs for each contract.
Revenue from contracts that satisfy the criteria for over-time recognition are recognized as work is performed by using the input method based on the ratio of costs incurred to estimated total contract costs for each contract.
Application of the goodwill impairment assessment requires judgement including the identification of reporting units, assignment of assets and liabilities to reporting units, business projections including changes in pricing, rental and sale activity and costs, long term growth rates and discount rates.
Application of the goodwill impairment assessment requires judgement including the identification - 51 - of reporting units, assignment of assets and liabilities to reporting units, business projections including changes in pricing, rental and sale activity and costs, long term growth rates and discount rates.
At December 31, 2023, the principal balance outstanding under the Series F Senior Notes was $75.0 million. 2.57% Senior Notes Due in 2028 On March 17, 2021, the Company issued and sold to the purchasers $40 million aggregate principal amount of 2.57% Series D Notes (the “Series D Senior Notes”) pursuant to the terms of the Amended and Restated Note Purchase and Private Shelf Agreement, dated March 31, 2020 (the “Note Purchase Agreement”), among the Company, PGIM, Inc. and the noteholders party thereto.
At December 31, 2024, the principal balance outstanding under the Series F Senior Notes was $75.0 million. 2.57% Senior Notes Due in 2028 On March 17, 2021, the Company issued and sold to the purchasers $40.0 million aggregate principal amount of 2.57% Series D Notes (the “Series D Senior Notes”) pursuant to the terms of the Amended and Restated Note Purchase and Private Shelf Agreement, dated March 31, 2020 (the “Note Purchase Agreement”), among the Company, PGIM, Inc. and the noteholders party thereto.
For 2023, Portable Storage’s selling and administrative expenses increased $7.1 million, or 29%, to $31.5 million, primarily due to $3.2 million higher allocated corporate expenses, which included $1.3 million of allocated transaction costs from the divestiture of Adler Tanks, and increased employee salaries and benefit costs totaling $2.0 million, as compared to 2022. - 40 - TRS-RenTelco For 2023, TRS-RenTelco’s total revenues decreased $2.5 million, or 2%, to $148.3 million compared to 2022, primarily due to lower rental revenues, partially offset by higher sales and other revenues.
For 2023, Portable Storage’s selling and administrative expenses increased $7.1 million, or 29%, to $31.5 million, primarily due to $3.2 million higher allocated corporate expenses, which included $1.3 million of allocated transaction costs from the divestiture of Adler Tanks, and increased employee salaries and benefit costs totaling $2.0 million, as compared to 2022. - 42 - TRS-RenTelco For 2023, TRS-RenTelco’s total revenues decreased $2.5 million, or 2%, to $148.3 million compared to 2022, primarily due to lower rental revenues, partially offset by higher sales and other revenues.
The principal balance is due when the notes mature on March 17, 2028. The full net proceeds from the Series D Senior Notes were used to pay off the Company’s $40 million Series B Senior Notes.
The principal balance is due when the notes mature on March 17, 2028. The full net proceeds from the Series D Senior Notes were used to pay off the Company’s $40.0 million Series B Senior Notes.
TRS-RenTelco – 2023 compared to 2022 (dollar amounts in thousands) Year Ended December 31, Increase (Decrease) 2023 2022 $ % Revenues Rental $ 114,247 $ 121,375 $ (7,128 ) (6 )% Rental related services 3,139 3,112 27 1 % Rental operations 117,386 124,487 (7,101 ) (6 )% Sales 27,119 24,571 2,548 10 % Other 3,772 1,720 2,052 nm Total revenues 148,277 150,778 (2,501 ) (2 )% Costs and Expenses Direct costs of rental operations: Depreciation of rental equipment 48,477 49,253 (776 ) (2 )% Rental related services 2,670 2,592 78 3 % Other 20,642 21,327 (685 ) (3 )% Total direct costs of rental operations 71,789 73,172 (1,383 ) (2 )% Costs of sales 13,884 9,707 4,177 43 % Total costs of revenues 85,673 82,879 2,794 3 % Gross Profit Rental 45,128 50,795 (5,667 ) (11 )% Rental related services 469 520 (51 ) (10 )% Rental operations 45,597 51,315 (5,718 ) (11 )% Sales 13,235 14,864 (1,629 ) (11 )% Other 3,772 1,720 2,052 119 % Total gross profit 62,604 67,899 (5,295 ) (8 )% Selling and administrative expenses (30,962 ) (27,245 ) 3,717 14 % Other income 832 — 832 nm Income from operations 32,474 40,654 (8,180 ) (20 )% Interest expense allocation (8,146 ) (3,294 ) 4,852 nm Foreign currency exchange loss 310 (378 ) 688 nm Pre-tax income $ 24,638 $ 36,982 $ (12,344 ) (33 )% Other Selected Information Adjusted EBITDA $ 84,736 $ 92,007 $ (7,271 ) (8 )% Average rental equipment 1 $ 388,679 $ 383,235 $ 5,444 1 % Average rental equipment on rent $ 228,787 $ 245,893 $ (17,106 ) (7 )% Average monthly total yield 2 2.43 % 2.63 % (8 )% Average utilization 3 58.9 % 64.2 % (8 )% Average monthly rental rate 4 4.16 % 4.11 % 1 % Period end rental equipment 1 $ 374,438 $ 395,214 $ (20,776 ) (5 )% Period end utilization 3 55.9 % 59.4 % (6 )% 1.
TRS-RenTelco – 2023 compared to 2022 (dollar amounts in thousands) Year Ended December 31, Increase (Decrease) 2023 2022 $ % Revenues Rental $ 114,247 $ 121,375 $ (7,128 ) (6 )% Rental related services 3,139 3,112 27 1 % Rental operations 117,386 124,487 (7,101 ) (6 )% Sales 27,119 24,571 2,548 10 % Other 3,772 1,720 2,052 nm Total revenues 148,277 150,778 (2,501 ) (2 )% Costs and Expenses Direct costs of rental operations: Depreciation of rental equipment 48,477 49,253 (776 ) (2 )% Rental related services 2,670 2,592 78 3 % Other 20,642 21,327 (685 ) (3 )% Total direct costs of rental operations 71,789 73,172 (1,383 ) (2 )% Costs of sales 13,884 9,707 4,177 43 % Total costs of revenues 85,673 82,879 2,794 3 % Gross Profit Rental 45,128 50,795 (5,667 ) (11 )% Rental related services 469 520 (51 ) (10 )% Rental operations 45,597 51,315 (5,718 ) (11 )% Sales 13,235 14,864 (1,629 ) (11 )% Other 3,772 1,720 2,052 119 % Total gross profit 62,604 67,899 (5,295 ) (8 )% Selling and administrative expenses 30,962 27,245 3,717 14 % Other income (832 ) — 832 nm Income from operations 32,474 40,654 (8,180 ) (20 )% Interest expense allocation 8,146 3,294 4,852 nm Foreign currency exchange (gain) loss (310 ) 378 688 nm Pre-tax income $ 24,638 $ 36,982 $ (12,344 ) (33 )% Other Selected Information Adjusted EBITDA $ 83,903 $ 92,007 $ (8,104 ) (9 )% Average rental equipment 1 $ 388,679 $ 383,235 $ 5,444 1 % Average rental equipment on rent $ 228,787 $ 245,893 $ (17,106 ) (7 )% Average monthly total yield 2 2.43 % 2.63 % (8 )% Average utilization 3 58.9 % 64.2 % (8 )% Average monthly rental rate 4 4.16 % 4.11 % 1 % Period end rental equipment 1 $ 374,438 $ 395,214 $ (20,776 ) (5 )% Period end utilization 3 55.9 % 59.4 % (6 )% 1.
Mobile Modular – 2023 compared to 2022 (dollar amounts in thousands) Year Ended December 31, Increase (Decrease) 2023 2022 $ % Revenues Rental $ 285,553 $ 206,070 $ 79,483 39 % Rental related services 114,511 74,756 39,755 53 % Rental operations 400,064 280,826 119,238 42 % Sales 155,267 97,046 58,221 60 % Other 6,905 1,339 5,566 nm Total revenues 562,236 379,211 183,025 48 % Costs and Expenses Direct costs of rental operations: Depreciation of rental equipment 36,921 28,373 8,548 30 % Rental related services 75,390 49,910 25,480 51 % Other 86,983 76,819 10,164 13 % Total direct costs of rental operations 199,294 155,102 44,192 28 % Costs of sales 105,021 62,224 42,797 69 % Total costs of revenues 304,315 217,326 86,989 40 % Gross Profit Rental 161,649 100,878 60,771 60 % Rental related services 39,121 24,847 14,274 57 % Rental operations 200,770 125,725 75,045 60 % Sales 50,246 34,822 15,424 44 % Other 6,905 1,339 5,566 nm Total gross profit 257,921 161,885 96,036 59 % Selling and administrative expenses (138,574 ) (85,769 ) 52,805 62 % Other income 2,329 — 2,329 nm Income from operations 121,676 76,116 45,560 60 % Interest expense allocation (29,724 ) (8,657 ) 21,067 nm Pre-tax income $ 91,952 $ 67,459 $ 24,493 36 % Other Selected Information Adjusted EBITDA $ 191,990 $ 121,981 $ 70,009 57 % Average rental equipment 1 $ 1,093,086 $ 855,640 $ 237,446 28 % Average rental equipment on rent $ 870,621 $ 667,559 $ 203,062 30 % Average monthly total yield 2 2.18 % 2.01 % 8 % Average utilization 3 79.7 % 78.0 % 2 % Average monthly rental rate 4 2.73 % 2.57 % 6 % Period end rental equipment 1 $ 1,163,704 $ 869,926 $ 293,778 34 % Period end utilization 3 79.4 % 80.3 % (1 )% 1.
Mobile Modular – 2023 compared to 2022 (dollar amounts in thousands) Year Ended December 31, Increase (Decrease) 2023 2022 $ % Revenues Rental $ 285,553 $ 206,070 $ 79,483 39 % Rental related services 114,511 74,756 39,755 53 % Rental operations 400,064 280,826 119,238 42 % Sales 155,267 97,046 58,221 60 % Other 6,905 1,339 5,566 nm Total revenues 562,236 379,211 183,025 48 % Costs and Expenses Direct costs of rental operations: Depreciation of rental equipment 36,921 28,373 8,548 30 % Rental related services 75,390 49,910 25,480 51 % Other 86,983 76,819 10,164 13 % Total direct costs of rental operations 199,294 155,102 44,192 28 % Costs of sales 105,021 62,224 42,797 69 % Total costs of revenues 304,315 217,326 86,989 40 % Gross Profit Rental 161,649 100,878 60,771 60 % Rental related services 39,121 24,847 14,274 57 % Rental operations 200,770 125,725 75,045 60 % Sales 50,246 34,822 15,424 44 % Other 6,905 1,339 5,566 nm Total gross profit 257,921 161,885 96,036 59 % Selling and administrative expenses 138,574 85,769 52,805 62 % Other income (2,329 ) — 2,329 nm Income from operations 121,676 76,116 45,560 60 % Interest expense allocation 29,724 8,657 21,067 nm Pre-tax income $ 91,952 $ 67,459 $ 24,493 36 % Other Selected Information Adjusted EBITDA $ 189,661 $ 121,981 $ 67,680 55 % Average rental equipment 1 $ 1,093,086 $ 855,640 $ 237,446 28 % Average rental equipment on rent $ 870,621 $ 667,559 $ 203,062 30 % Average monthly total yield 2 2.18 % 2.01 % 8 % Average utilization 3 79.7 % 78.0 % 2 % Average monthly rental rate 4 2.73 % 2.57 % 6 % Period end rental equipment 1 $ 1,163,704 $ 869,926 $ 293,778 34 % Period end utilization 3 79.4 % 80.3 % (1 )% 1.
If the estimated residual values of all of our rental equipment were to change one percentage point, the Company estimates the annual depreciation expense would change by approximately $1 million.
If the estimated residual values of all of our rental equipment were to change one percentage point, the Company estimates the annual depreciation expense would change by approximately $1.0 million.
At December 31, 2023 the Company was comprised of four reportable business segments: (1) its modular building rental segment (“Mobile Modular”); (2) its portable storage container rental segment ("Portable Storage"); (3) its electronic test equipment rental segment (“TRS-RenTelco”); and (4) its classroom manufacturing segment selling modular buildings used primarily as classrooms in California (“Enviroplex”).
At December 31, 2024 the Company was comprised of four reportable business segments: (1) its modular building rental segment (“Mobile Modular”); (2) its portable storage container rental segment ("Portable Storage"); (3) its electronic test equipment rental segment (“TRS-RenTelco”); and (4) its classroom manufacturing segment selling modular buildings used primarily as classrooms in California (“Enviroplex”).
Contractual Obligations and Commitments At December 31, 2023, the Company’s material contractual obligations and commitments consisted of outstanding borrowings under our credit facilities expiring in 2027, outstanding amounts under our 2.35%, 2.57% and 6.25% senior notes due in 2026, 2028 and 2030, respectively, and operating leases for facilities. The operating lease amounts exclude property taxes and insurance.
Contractual Obligations and Commitments At December 31, 2024, the Company’s material contractual obligations and commitments consisted of outstanding borrowings under our credit facilities expiring in 2027, outstanding amounts under our 2.35%, 2.57% and 6.25% senior notes due in 2026, 2028 and 2030, respectively, and operating leases for facilities. The operating lease amounts exclude property taxes and insurance.
There are no anticipated trends that the Company is aware of that would indicate non-compliance with these covenants, though, significant deterioration in our financial performance could impact the Company's ability to comply with these covenants. - 49 - Liquidity and Capital Resources The Company’s rental businesses are capital intensive and generate significant cash flows.
There are no anticipated trends that the Company is aware of that would indicate non-compliance with these covenants, though, significant deterioration in our financial performance could impact the Company's ability to comply with these covenants. - 46 - Liquidity and Capital Resources The Company’s rental businesses are capital intensive and generate significant cash flows.
The Credit Facility permits the Company’s existing indebtedness to remain, which includes the Company’s $20.0 million Treasury Sweep Note due July 15, 2027, the Company’s existing senior notes issued pursuant to the Note Purchase and Private Shelf Agreement with Prudential Investment Management, Inc., dated as of April 21, 2011 (as amended): (i) the $60.0 million aggregate outstanding principal of notes issued November 5, 2015 which were repaid on November 5, 2022, (ii) the $40.0 million aggregate outstanding principal of notes issued March 17, 2021 and due March 17, 2028, and (iii) the $60.0 million aggregate outstanding principal of notes issued June 16, 2021 and due June 16, 2026.
The Credit Facility permits the Company’s existing indebtedness to remain, which includes the Company’s $20.0 million Treasury Sweep Note due July 15, 2027, the Company’s existing senior notes issued pursuant to the Note Purchase and Private Shelf Agreement with Prudential Investment Management, Inc., dated as of April 21, 2011 (as amended): (i) the $60.0 million aggregate outstanding principal of notes issued November 5, 2015 and due November 5, 2022, (ii) the $40.0 million aggregate outstanding principal of notes issued March 17, 2021 and due March 17, 2028, and (iii) the $60.0 million aggregate outstanding principal of notes issued June 16, 2021 and due June 16, 2026.
At December 31, 2023, the Company was in compliance with each of the aforementioned covenants. There are no anticipated trends that the Company is aware of that would indicate non-compliance with these covenants, although significant deterioration in our financial performance could impact the Company’s ability to comply with these covenants.
At December 31, 2024, the Company was in compliance with each of the aforementioned covenants. There are no anticipated trends that the Company is aware of that would indicate non-compliance with these covenants, although significant deterioration in our financial performance could impact the Company’s ability to comply with these covenants.
At December 31, 2023, the Company was in compliance with each of the aforementioned covenants. There are no anticipated trends that the Company is aware of that would indicate non-compliance with these covenants, although significant deterioration in our financial performance could impact the Company’s ability to comply with these covenants.
At December 31, 2024, the Company was in compliance with each of the aforementioned covenants. There are no anticipated trends that the Company is aware of that would indicate non-compliance with these covenants, although significant deterioration in our financial performance could impact the Company’s ability to comply with these covenants.
Please see the Company's Consolidated Statements of Cash Flows on page 65 for a more detailed presentation of the sources and uses of the Company's cash. Critical Accounting Policies The Company prepares its consolidated financial statements in accordance with GAAP. A summary of the Company’s significant accounting policies are in Note 1 to the Company’s consolidated financial statements.
Please see the Company's Consolidated Statements of Cash Flows on page 63 for a more detailed presentation of the sources and uses of the Company's cash. Critical Accounting Policies The Company prepares its consolidated financial statements in accordance with GAAP. A summary of the Company’s significant accounting policies are in Note 1 to the Company’s consolidated financial statements.
Average monthly rental rate is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment on rent for the period. nm = Not meaningful - 39 - Portable Storage’s gross profit for 2023 increased $13.6 million, or 25%, to $68.9 million.
Average monthly rental rate is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment on rent for the period. nm = Not meaningful - 41 - Portable Storage’s gross profit for 2023 increased $13.6 million, or 25%, to $68.9 million.
Average monthly rental rate is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment on rent for the period. nm = Not meaningful - 41 - TRS-RenTelco’s gross profit for 2023 decreased $5.3 million, or 8%, to $62.6 million.
Average monthly rental rate is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment on rent for the period. nm = Not meaningful - 43 - TRS-RenTelco’s gross profit for 2023 decreased $5.3 million, or 8%, to $62.6 million.
In 2023, 2022 and 2021 the Company performed qualitative assessments taking into consideration the market value of the Company, any changes in management, key personnel, strategy and any relevant macroeconomic conditions, concluding that the fair value of the reporting units substantially exceeded the respective reporting units carrying value, including goodwill.
In 2024, 2023 and 2022 the Company performed qualitative assessments taking into consideration the market value of the Company, any changes in management, key personnel, strategy and any relevant macroeconomic conditions, concluding that the fair value of the reporting units substantially exceeded the respective reporting units carrying value, including goodwill.
The rental and sale of modulars to public school districts comprised 18%, 21% and 24% of the Company’s consolidated rental and sales revenues from continuing operations for 2023, 2022 and 2021, respectively. (For more information, see “Item 1.
The rental and sale of modulars to public school districts comprised 24%, 18% and 21% of the Company’s consolidated rental and sales revenues from continuing operations for 2024, 2023 and 2022, respectively. (For more information, see “Item 1.
Adjusted EBITDA is defined as income from operations before interest expense, provision for income taxes, depreciation, amortization, share-based compensation and transaction costs. 2. Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by total revenues for the period. 3. Transaction costs include acquisition and divestiture related legal and professional fees and other costs specific to these transactions.
Adjusted EBITDA is defined as income from operations before interest expense, provision for income taxes, depreciation, amortization, share-based compensation and non-operating transactions. 2. Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by total revenues for the period. 3. Transaction costs include acquisition and divestiture related legal and professional fees and other costs specific to these transactions. 4.
A reconciliation of Adjusted EBITDA to net cash provided by operating activities and net income to Adjusted EBITDA can be found on page 48. - 36 - Mobile Modular For 2023, Mobile Modular’s total revenues increased $183.0 million, or 48%, to $562.2 million compared to 2022, primarily due to higher rental, sales and rental related services revenues.
A reconciliation of Adjusted EBITDA to net cash provided by operating activities and net income to Adjusted EBITDA can be found on page 45. - 38 - Mobile Modular For 2023, Mobile Modular’s total revenues increased $183.0 million, or 48%, to $562.2 million compared to 2022, primarily due to higher rental, sales and rental related services revenues.
These results are discussed on a segment basis below. Pre-tax income contribution by Enviroplex was 0% for 2023 and 1% for 2022. • The provision for income taxes resulted in an effective tax rate of 25.5% and 23.3% for the twelve months ended December 31, 2023 and 2022, respectively.
These results are discussed on a segment basis below. Pre-tax income contribution by Enviroplex was less than 1% for 2023 and 1% for 2022. • The provision for income taxes resulted in an effective tax rate of 25.5% and 23.3% for the twelve months ended December 31, 2023 and 2022, respectively.
In addition, the Company had $10.7 million higher marketing and administrative costs compared to 2022, which included $7.7 million Vesta transaction costs. - 38 - Portable Storage For 2023, Portable Storage’s total revenues increased $18.6 million, or 23%, to $101.1 million compared to 2022, primarily due to higher rental, rental related services and sales revenues.
In addition, the Company had $10.7 million higher marketing and administrative costs compared to 2022, which included $7.7 million Vesta Modular transaction costs. - 40 - Portable Storage For 2023, Portable Storage’s total revenues increased $18.6 million, or 23%, to $101.1 million compared to 2022, primarily due to higher rental, rental related services and sales revenues.
The principal balance is due when the notes mature on September 27, 2030. The full net proceeds from the Series F Senior Notes will primarily be used to fulfill the income tax obligations incurred from the divestiture of Adler Tanks.
The principal balance is due when the notes mature on September 27, 2030. The full net proceeds from the Series F Senior Notes were primarily used to fulfill the income tax obligations incurred from the divestiture of Adler Tanks.
At December 31, 2023, the actual ratio was 3.33 to 1. • Permit the Consolidated Leverage Ratio of funded debt (as defined in the Credit Facility and the Note Purchase Agreement) to Adjusted EBITDA at any time during any period of four consecutive quarters to be greater than 2.75 to 1.
At December 31, 2024, the actual ratio was 3.19 to 1. • Permit the Consolidated Leverage Ratio of funded debt (as defined in the Credit Facility and the Note Purchase Agreement) to Adjusted EBITDA at any time during any period of four consecutive quarters to be greater than 2.75 to 1.
The table - 52 - below provides a summary of the Company’s contractual obligations and reflects expected payments due as of December 31, 2023 and does not reflect changes that could arise after that date.
The table below provides a summary of the Company’s contractual obligations and reflects expected payments due as of December 31, 2024 and does not reflect changes that could arise after that date.
To the extent that the useful lives of all of our rental equipment were to decrease or increase by one year, the Company estimates the annual depreciation expense would increase or decrease by approximately $4 million.
To the extent that the useful lives of all of our rental equipment were to decrease or increase by one year, the Company estimates the annual depreciation expense would increase or decrease by approximately $5.0 million.
The Company had other capital expenditures for property, plant and equipment of $44.0 million in 2023, $17.6 million in 2022 and $2.7 million in 2021, and has used cash to provide returns to its shareholders in the form of cash dividends.
The Company had other capital expenditures for property, plant and equipment of $40.2 million in 2024, $44.0 million in 2023 and $17.6 million in 2022, and has used cash to provide returns to its shareholders in the form of cash dividends.
The $260.4 million increase in net cash used was primarily due to the $462.1 million paid for the business acquisitions of Vesta Modular, Brekke Storage, Dixie Storage and Inland Leasing in 2023, partly offset by $268.0 million in proceeds received from the sale of the Adler Tanks business.
The $241.1 million reduction in net cash used was primarily due to the $462.1 million paid for the business acquisitions of Vesta Modular, Brekke Storage, Dixie Storage and Inland Leasing in 2023, partly offset by $268.0 million in proceeds received from the sale of the Adler Tanks business.
Average monthly rental rate is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment on rent for the period. - 37 - Mobile Modular’s gross profit for 2023 increased $96.0 million, or 59%, to $257.9 million.
Average monthly rental rate is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment on rent for the period. nm = Not meaningful - 39 - Mobile Modular’s gross profit for 2023 increased $96.0 million, or 59%, to $257.9 million.
Cash flows for the Company in 2023 as compared to 2022 are summarized as follows: Cash Flows from Operating Activities: The Company’s operations provided net cash flows of $95.3 million for 2023, compared to $194.4 million in 2022.
Cash flows for the Company in 2024 as compared to 2023 are summarized as follows: Cash Flows from Operating Activities: The Company’s operations provided net cash flows of $374.4 million for 2024, compared to $95.3 million in 2023.
The Company’s rental operations include rental and rental related services revenues which comprised approximately 74% of the Company’s total revenues from continuing operations in 2023 and 76% for the three years ended December 31, 2023.
The Company’s rental operations include rental and rental related services revenues which comprised approximately 70% of the Company’s total revenues from continuing operations in 2024 and 74% for the three years ended December 31, 2024.
Management believes the exclusion of non-cash charges, including share-based compensation, and transaction costs 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.
Management believes the exclusion of non-cash charges and non-operating 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.
At December 31, 2023, the actual ratio was 3.33 to 1. • Permit the Consolidated Leverage Ratio of funded debt to EBITDA (as defined in the Note Purchase Agreement) at any time during any period of four consecutive quarters to be greater than 2.75 to 1. At December 31, 2023, the actual ratio was 2.34 to 1.
At December 31, 2024, the actual ratio was 3.19 to 1. • Permit the Consolidated Leverage Ratio of funded debt to EBITDA (as defined in the Note Purchase Agreement) at any time during any period of four consecutive quarters to be greater than 2.75 to 1. At December 31, 2024, the actual ratio was 1.68 to 1.
Over the past three years, modulars, storage containers and electronic test equipment comprised approximately 61%, 15% and 24%, respectively, of the cumulative rental operations revenues from continuing operations.
Over the past three years, modulars, storage containers and electronic test equipment comprised approximately 65%, 15% and 20%, respectively, of the cumulative rental operations revenues from continuing operations.
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 and transaction costs.
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.
At December 31, 2023, the actual ratio was 3.33 to 1. • Permit the Consolidated Leverage Ratio of funded debt to EBITDA at any time during any period of four consecutive fiscal quarters to be greater than 2.75 to 1. At December 31, 2023, the actual ratio was 2.34 to 1.
At December 31, 2024, the actual ratio was 3.19 to 1. • Permit the Consolidated Leverage Ratio of funded debt to EBITDA at any time during any period of four consecutive fiscal quarters to be greater than 2.75 to 1. At December 31, 2024, the actual ratio was 1.68 to 1.
Other revenues include interest income on sales-type leases and rental income on facility leases. Non-lease revenue - Sales revenue is recognized upon delivery and installation of the equipment to customers. Certain leases are accounted for as sales-type leases.
Other revenues include interest income on sales-type leases and rental income on facility leases. Non-lease revenue - Sales revenue is recognized upon delivery and installation of the equipment to customers.
The lives and residual values of rental equipment are subject to periodic evaluation. For modular equipment, external factors to consider may include, but are not limited to, changes in legislation, regulations, building codes, local permitting, and supply or demand. Internal factors for modulars may include, but are not limited to, change in equipment specifications, condition of equipment, or maintenance policies.
For modular equipment, external factors to consider may include, but are not limited to, changes in legislation, regulations, building codes, local permitting, and supply or demand. Internal factors for modulars may include, but are not limited to, change in equipment specifications, condition of equipment, or maintenance policies.
All obligations outstanding under the prior credit facility as of the date of the Credit Facility were refinanced by the Credit Facility on July 15, 2022.
All obligations outstanding under the prior credit facility as of the date of the Credit Facility were refinanced by the Credit Facility on April 23, 2022.
At December 31, 2023, the principal balance outstanding under the Series D Senior Notes was $40.0 million. 2.35% Senior Notes Due in 2026 On June 16, 2021, the Company issued and sold to the purchasers $60 million aggregate principal amount of 2.35% Series E Notes (the "Series E Notes") pursuant to the terms of the Amended and Restated Note Purchase and Private Shelf Agreement, dated March 31, 2020 (the “Note Purchase Agreement”), among the Company, PGIM, Inc. and the noteholders party thereto.
At December 31, 2024, the principal balance outstanding under the Series D Senior Notes was $40.0 million. 2.35% Senior Notes Due in 2026 On June 16, 2021, the Company issued and sold to the purchasers $60.0 million aggregate principal amount of 2.35% Series E Notes (the "Series E Notes") pursuant to the terms of the Amended and Restated Note Purchase and Private Shelf Agreement, dated March 31, 2020 (the “Note Purchase Agreement”), among the Company, PGIM, Inc. and the noteholders party thereto. - 49 - The Series E Senior Notes are an unsecured obligation of the Company and bear interest at a rate of 2.35% per annum and mature on June 16, 2026.
Sales and other revenues of modulars, containers and electronic test equipment have comprised approximately 26% of the Company’s consolidated revenues from continuing operations in 2023 and 24% for the three years ended December 31, 2023. Over the past three years, modulars, containers and electronic test equipment comprised approximately 81%, 3% and 16% of sales and other revenues, respectively.
Sales and other revenues of modulars, containers and electronic test equipment have comprised approximately 30% of the Company’s consolidated revenues from continuing operations in 2024 and 26% for the three years ended December 31, 2024. Over the past three years, modulars, containers and electronic test equipment comprised approximately 83%, 3% and 14% of sales and other revenues, respectively.
At December 31, 2023, the actual ratio was 2.34 to 1. At December 31, 2023, the Company was in compliance with each of these aforementioned covenants.
At December 31, 2024, the actual ratio was 1.68 to 1. At December 31, 2024, the Company was in compliance with each of these aforementioned covenants.
In 2023, Mobile Modular, Portable Storage, TRS-RenTelco and Enviroplex contributed 62%, 22%, 16% and 0%, respectively, of the Company’s income from continuing operations before provision for taxes (the equivalent of “pre-tax income”), compared to 50%, 22%, 27% and 1%, respectively, for 2022.
In 2024, Mobile Modular, Portable Storage, TRS-RenTelco and Enviroplex contributed 68%, 16%, 12% and 4%, respectively, of the Company’s income from continuing operations before provision for taxes (the equivalent of “pre-tax income”), compared to 62%, 22%, 16% and less than 1%, respectively, for 2023.
Sales occur routinely as a normal part of Mobile Modular’s rental business; however, these sales can fluctuate from period to period depending on customer requirements, equipment availability and funding.
Sales of rental equipment occur routinely as a normal part of the Company’s rental businesses. However, these sales can fluctuate from period to period depending on customer requirements and funding.
These instruments contain financial covenants requiring the Company to not: • Permit the Consolidated Fixed Charge Coverage Ratio (as defined in the Credit Facility and the Note Purchase Agreement (as defined and more fully described under the heading “Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources”). These instruments contain financial covenants requiring the Company to not: • Permit the Consolidated Fixed Charge Coverage Ratio (as defined in the Credit Facility and the Note Purchase Agreement (as defined and more fully described under the heading “Item 7.
Unsecured Revolving Lines of Credit On July 15, 2022, the Company entered into an amended and restated credit agreement with Bank of America, N.A., as Administrative Agent, Swing Line Lender, L/C Issuer and lender, and other lenders named therein (the “Credit Facility”).
As of December 31, 2024, 2,000,000 shares remain authorized for repurchase under the Repurchase Plan. Unsecured Revolving Lines of Credit On July 15, 2022, the Company entered into an amended and restated credit agreement with Bank of America, N.A., as Administrative Agent, Swing Line Lender, L/C Issuer and lender, and other lenders named therein (the “Credit Facility”).
During the year ended December 31, 2023, the Company transacted a total of $462.1 million in acquisition related costs. There were no acquisition related transactions during the year ended December 31, 2022 and $292.2 million in acquisition related costs during the same period in 2021.
During the year ended December 31, 2023, the Company transacted a total of $462.1 million in acquisition related costs. There were no acquisition related transactions during the years ended December 31, 2024 and 2022, respectively.
For the year ended December 31, 2023, total Adjusted EBITDA from both continuing and discontinued operations was $325.7 million, excluding the gain on divestiture of Adler Tanks, compared to $288.9 million for the same period in 2022.
For the year ended December 31, 2024, total Adjusted EBITDA from continuing and discontinued operations was $351.7 million, compared to $322.0 million for the same period in 2023, excluding the gain on sale of the divestiture of Adler Tanks.
The Credit Facility provides for a $650.0 million unsecured revolving credit facility (which may be further increased to $950.0 million by adding one or more tranches of term loans and/or increasing the aggregate revolving commitments), which includes a $40.0 million sublimit for the issuance of standby letters of credit and a $20.0 million sublimit for swingline loans.
The Credit Facility provides for a $650.0 million unsecured revolving credit facility (which may be further increased to $950.0 million, of which as of December 31, 2024, $73.0 million was utilized through the term loan entered on April 23, 2024, by adding one or more tranches of term loans and/or increasing the aggregate revolving commitments), which includes a $40.0 million sublimit for the issuance of standby letters of credit and a $20.0 million sublimit for swingline loans.
For 2022, TRS-RenTelco’s selling and administrative expenses increased $2.1 million, or 8%, to $27.2 million, primarily due to $0.9 million higher allocated corporate expenses and an increase of $0.7 million in marketing and administrative expenses, compared to 2021. - 47 - Adjusted EBITDA 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 and transaction costs.
For 2023, TRS-RenTelco’s selling and administrative expenses increased $3.7 million, or 14%, to $31.0 million, primarily due to $2.6 million higher allocated corporate expenses, which included $1.6 million of allocated transaction costs from the divestiture of Adler Tanks, as compared to 2022. - 44 - Adjusted EBITDA 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 principal balance is due when the notes mature on June 16, 2026. The full net proceeds from the Series E Senior Notes were used to pay down the Company’s credit facility. At December 31, 2023, the principal balance outstanding under the Series E Senior Notes was $60.0 million.
The full net proceeds from the Series E Senior Notes were used to pay down the Company’s credit facility. At December 31, 2024, the principal balance outstanding under the Series E Senior Notes was $60.0 million.
During the last three years, the Company has financed its working capital and capital expenditure requirements through cash flows from operations, proceeds from the sale of rental equipment and from borrowings.
Significant capital expenditures are required to maintain and grow the Company’s rental assets. During the last three years, the Company has financed its working capital and capital expenditure requirements through cash flows from operations, proceeds from the sale of rental equipment and from borrowings.
Average monthly rental rate is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment on rent for the period. nm = Not meaningful - 46 - TRS-RenTelco’s gross profit for 2022 increased $6.5 million, or 11%, to $67.9 million.
Average monthly rental rate is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment on rent for the period. - 36 - nm = Not meaningful TRS-RenTelco’s gross profit for 2024 decreased $6.5 million, or 10%, to $56.1 million.
At December 31, 2023, under the Credit Facility and Sweep Service Facility, the Company had unsecured lines of credit that permit it to borrow up to $650.0 million of which $588.0 million was outstanding.
At December 31, 2024, under the Credit Facility and Sweep Service Facility, the Company had unsecured lines of credit that permit it to borrow up to $650.0 million of which $342.4 million was outstanding and had the capacity to borrow up to an additional - 48 - $307.6 million.
A reconciliation of Adjusted EBITDA to net cash provided by operating activities and net income to Adjusted EBITDA can be found on page 48. - 43 - Mobile Modular For 2022, Mobile Modular’s total revenues increased $98.4 million, or 27%, to $461.7 million compared to 2021, primarily due to higher rental, sales and rental related services revenues.
A reconciliation of Adjusted EBITDA to net cash provided by operating activities and net income to Adjusted EBITDA can be found on page 45. - 31 - Mobile Modular For 2024, Mobile Modular’s total revenues increased $73.1 million, or 13%, to $635.4 million compared to 2023, primarily due to higher rental, sales and rental related services revenues.
The following table reconciles Adjusted EBITDA on a combined basis, including both continuing and discontinued operations, to the net cash provided by operating activities on the Company's consolidated statement of cash flows. - 48 - Reconciliation of Adjusted EBITDA to Net Cash Provided by Operating Activities (dollar amounts in thousands) Year Ended December 31, 2023 2022 2021 2020 2019 Adjusted EBITDA 1 $ 325,656 $ 288,866 $ 248,617 $ 241,023 $ 236,824 Interest paid (38,603 ) (14,775 ) (10,326 ) (9,050 ) (12,475 ) Income taxes paid, net of refunds received (91,565 ) (27,362 ) (9,087 ) (34,903 ) (17,528 ) Gain on sale of used rental equipment (31,642 ) (37,979 ) (25,441 ) (19,329 ) (21,309 ) Foreign currency exchange (gain) loss (310 ) 378 210 (78 ) (84 ) Amortization of debt issuance costs 8 16 15 11 11 Change in certain assets and liabilities: Accounts receivable, net (35,143 ) (30,524 ) (23,946 ) 4,783 (6,310 ) Prepaid expenses and other assets (29,326 ) (16,484 ) (6,816 ) 3,807 (13,530 ) Accounts payable and other liabilities (17,826 ) 8,595 11,155 3,229 17,257 Deferred income 14,094 23,701 9,082 (8,989 ) 5,138 Net cash provided by operating activities $ 95,343 $ 194,432 $ 193,463 $ 180,504 $ 187,994 1.
Reconciliation of Adjusted EBITDA to Net Cash Provided by Operating Activities (dollar amounts in thousands) Year Ended December 31, 2024 2023 2022 2021 2020 Adjusted EBITDA 1 $ 351,725 $ 322,038 $ 288,866 $ 248,617 $ 241,023 Interest paid (48,324 ) (38,603 ) (14,775 ) (10,326 ) (9,050 ) Income taxes paid, net of refunds received (36,524 ) (91,565 ) (27,362 ) (9,087 ) (34,903 ) Gain on sale of used rental equipment (35,085 ) (31,642 ) (37,979 ) (25,441 ) (19,329 ) Foreign currency exchange (gain) loss 215 (310 ) 378 210 (78 ) Amortization of debt issuance costs 66 8 16 15 11 Change in certain assets and liabilities: Accounts receivable, net 8,026 (35,143 ) (30,524 ) (23,946 ) 4,783 Prepaid expenses and other assets 6,887 (29,326 ) (16,484 ) (6,816 ) 3,807 Accounts payable and other liabilities 128,981 (14,208 ) 8,595 11,155 3,229 Deferred income (1,592 ) 14,094 23,701 9,082 (8,989 ) Net cash provided by operating activities $ 374,375 $ 95,343 $ 194,432 $ 193,463 $ 180,504 1.
The higher rate in 2023 was primarily due to changes in state business activity levels and nondeductible expenses. • Adjusted EBITDA increased $70.8 million, or 28%, to $322.0 million in 2023.
The higher rate in 2023 was primarily due to changes in state business activity levels and nondeductible expenses. • Adjusted EBITDA increased $67.2 million, or 27%, to $318.4 million in 2023.
Higher gross profit on rental, sales and rental related services revenues, partly offset by $17.6 million higher selling and administrative expenses, resulted in an increase in pre-tax income of $19.8 million, or 26%, to $96.8 million in 2022. The following table summarizes year-to-year results for each revenue and gross profit category, income from operations, pre-tax income, and other selected information.
Higher gross profit on rental, sales and rental related services revenues, and $1.9 million lower selling and administrative expenses, resulted in an increase in pre-tax income of $44.0 million, or 48%, to $136.0 million in 2024. The following table summarizes year-to-year results for each revenue and gross profit category, income from operations, pre-tax income, and other selected information.
Gross profit on sales increased $2.2 million, or 17%, to $14.9 million with a gross margin percentage of 60% in 2022, compared to 57% in 2021. The increase in gross margin during the year was primarily attributed to an increase in margin on used equipment sales.
Gross profit on sales increased $1.9 million, or 14%, to $15.1 million, with a gross margin percentage of 55% in 2024, compared to 49% in 2023. The higher gross margin during the year was primarily attributed to an increase in margin on used equipment sales.
Reconciliation of Income from Continuing Operations to Adjusted EBITDA (dollar amounts in thousands) Year Ended December 31, 2023 2022 2021 2020 2019 Income from continuing operations $ 111,852 $ 103,309 $ 85,085 $ 96,121 $ 85,907 Provision for income taxes 37,610 31,377 30,725 28,715 28,961 Interest expense 40,560 12,230 8,244 6,680 8,894 Depreciation and amortization 107,918 93,490 87,972 75,751 69,802 EBITDA 297,940 240,406 212,026 207,267 193,564 Share-based compensation 8,157 6,747 6,585 4,746 4,805 Transaction costs 3 15,877 4,053 2,045 — — Adjusted EBITDA 1 $ 321,974 $ 251,206 $ 220,656 $ 212,013 $ 198,369 Adjusted EBITDA margin 2 39 % 40 % 41 % 43 % 42 % 1.
Reconciliation of Income from Continuing Operations to Adjusted EBITDA (dollar amounts in thousands) Year Ended December 31, 2024 2023 2022 2021 2020 Income from continuing operations $ 231,727 $ 111,852 $ 103,309 $ 85,085 $ 96,121 Provision for income taxes 81,922 37,610 31,377 30,725 28,715 Interest expense 47,241 40,560 12,230 8,244 6,680 Depreciation and amortization 107,455 107,918 93,490 87,972 75,751 EBITDA 468,345 297,940 240,406 212,026 207,267 Share-based compensation 9,502 8,157 6,747 6,585 4,746 Transaction costs 3 63,159 15,877 4,053 2,045 — Other income, net 4 (9,281 ) (3,618 ) — — — Gain on merger termination from WillScot Mobile Mini 5 (180,000 ) — — — — Adjusted EBITDA 1 $ 351,725 $ 318,356 $ 251,206 $ 220,656 $ 212,013 Adjusted EBITDA margin 2 38 % 39 % 40 % 41 % 43 % 1.
As a percentage of rental revenues, depreciation was 41% and 42% in 2022 and 2021, respectively, and other direct costs was 18% in 2022 compared to 17% in 2021, which resulted in gross margin percentage of 42% in 2022 compared to 41% in 2021.
As a percentage of rental revenues, depreciation was 43% and 42% in 2024 and 2023, respectively, and other direct costs were 20% and 18% in 2024 and 2023, respectively, which resulted in gross margin percentage of 37% in 2024, compared to 40% in 2023.
Sales occur routinely as a normal part of TRS-RenTelco’s rental business; however, these sales and related gross margins can fluctuate from period to period depending on customer requirements, equipment availability and funding.
Sales occur routinely as a normal part of TRS-RenTelco’s rental business; however, these sales and related gross margins can fluctuate from period to period depending on customer requirements, equipment availability and funding. For 2024, TRS-RenTelco’s selling and administrative expenses decreased $4.0 million, or 13%, to $27.0 million, when compared to 2023.
Depreciation - The estimated useful lives and estimated residual values used for rental equipment are based on the Company’s experience as to the economic useful life and sale value of its products. Additionally, to the extent information is publicly available, the Company also compares its depreciation policies to other companies with similar rental products for reasonableness.
Additionally, to the extent information is publicly available, the Company also compares its depreciation policies to other companies with similar rental products for reasonableness. The lives and residual values of rental equipment are subject to periodic evaluation.
As a percentage of rental revenues, depreciation was 12% and 13% in 2022 and 2021, respectively, and other direct costs were 31% in 2022 and 27% in 2021, which resulted in gross margin percentage of 57% in 2022 compared to 60% in 2021.
As a percentage of rental revenues, depreciation was 13% in both 2024 and 2023, respectively, and other direct costs were 26% in 2024 and 30% in 2023, which resulted in gross margin percentage of 61% in 2024, compared to 57% in 2023.
TRS-RenTelco’s gross profit increased $6.5 million, or 11%, primarily due to higher gross profit on rental and sales revenues.
TRS-RenTelco’s gross profit decreased $6.5 million, or 10%, primarily due to lower gross profit on rental and other revenues.
The Company has in the past made purchases of shares of its common stock from time to time in over-the-counter market (NASDAQ) transactions, through privately negotiated, large block transactions and through a share repurchase plan, in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934.
The Company paid cash dividends of $46.8 million, $45.6 million and $44.3 million in the years ended December 31, 2024, 2023 and 2022, respectively. - 47 - The Company has in the past made purchases of shares of its common stock from time to time in over-the-counter market (NASDAQ) transactions, through privately negotiated, large block transactions and through a share repurchase plan, in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended (the "Exchange Act").
For the year ended December 31, 2022 compared to the year ended December 31, 2021: • Gross Profit on Rental Revenues – Rental revenues increased $47.7 million, or 22%, due to 15% higher average rental equipment on rent and 5% higher average monthly rental rates in 2022.
For the year ended December 31, 2024 compared to the year ended December 31, 2023: • Gross Profit on Rental Revenues – Rental revenues increased $32.6 million, or 11%, due to 9% higher average rental equipment on rent and 3% higher average monthly rental rates in 2024.
The increase in rental related services revenues was primarily attributable to higher amortization of modular building delivery and return delivery and dismantle revenues and increased delivery and return delivery revenues at Portable Storage.
The increase in rental related services revenues was primarily attributable to higher delivery, return delivery and dismantle revenues and higher site related services.
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Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Market Risk — interest-rate, FX, commodity exposure
6 edited+0 added−0 removed1 unchanged
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Market Risk — interest-rate, FX, commodity exposure
6 edited+0 added−0 removed1 unchanged
2023 filing
2024 filing
Biggest change(dollar amounts in thousands) 2024 2025 2026 2027 2028 Thereafter Total Estimated Fair Value Revolving lines of credit $ — $ — $ — $ 588,000 $ — $ — $ 588,000 $ 588,000 Weighted average interest rate — — — 6.63 % — — 6.63 % 2.35% Series E senior notes due in 2026 $ — $ — $ 60,000 $ — $ — $ — $ 60,000 $ 55,950 Stated interest rate — — 2.35 % — — — 2.35 % 2.57% Series D senior notes due in 2028 $ — $ — $ — $ — $ 40,000 $ — $ 40,000 $ 35,931 Stated interest rate — — — — 2.57 % — 2.57 % 6.25% Series F senior notes due in 2030 $ 75,000 $ 75,000 $ 77,283 Stated interest rate — — — — — 6.25 % 6.25 % The Company formed a wholly owned Canadian subsidiary, TRS-RenTelco Inc., in 2004 in conjunction with the TRS acquisition and a wholly owned Indian subsidiary, TRS-RenTelco India Private Limited, in 2013.
Biggest change(dollar amounts in thousands) 2025 2026 2027 2028 2029 Thereafter Total Estimated Fair Value Revolving lines of credit and term loan $ — $ — $ 415,440 $ — $ — $ — $ 415,440 $ 415,440 Weighted average interest rate — — 6.94 % — — — 6.94 % 2.35% Series E senior notes due in 2026 $ — $ 60,000 $ — $ — $ — $ — $ 60,000 $ 57,285 Stated interest rate — 2.35 % — — — — 2.35 % 2.57% Series D senior notes due in 2028 $ — $ — $ — $ 40,000 $ — $ — $ 40,000 $ 36,366 Stated interest rate — — — 2.57 % — — 2.57 % 6.25% Series F senior notes due in 2030 $ 75,000 $ 75,000 $ 75,725 Stated interest rate — — — — — 6.25 % 6.25 % The Company formed a wholly owned Canadian subsidiary, TRS-RenTelco Inc., in 2004 in conjunction with the TRS acquisition and a wholly owned Indian subsidiary, TRS-RenTelco India Private Limited, in 2013.
The Company commenced the closure of its Indian operations during 2017. The Canadian operations of the Company subject it to foreign currency risks (i.e. the possibility that the financial results could be better or worse than planned because of changes in foreign currency exchange rates).
The Company commenced the closure of its Indian operations during 2017. The Canadian operations of the Company subject it to foreign currency risks (i.e. the possibility that the - 52 - financial results could be better or worse than planned because of changes in foreign currency exchange rates).
The table below presents principal cash flows by expected annual maturities, related weighted average interest rates and estimated fair value for the Company’s Series E, Series D and Series F Senior Notes and the Company’s revolving lines of credit under the Credit Facility and Sweep Service Facility as of December 31, 2023.
The table below presents principal cash flows by expected annual maturities, related weighted average interest rates and estimated fair value for the Company’s Series E, Series D and Series F Senior Notes and the Company’s revolving lines of credit under the Credit Facility and Sweep Service Facility as of December 31, 2024.
Weighted average variable rates are based on implied forward rates in the yield curve at December 31, 2023. The estimate of fair value of the Company’s fixed rate debt is based on the borrowing rates currently available to the Company for bank loans with similar terms and average maturities.
Weighted average variable rates are based on implied forward rates in the yield curve at December 31, 2024. The estimate of fair value of the Company’s fixed rate debt is based on the borrowing rates currently available to the Company for bank loans with similar terms and average maturities.
Currently, the Company does not use derivative instruments to hedge its economic exposure with respect to assets, liabilities and firm commitments denominated in foreign currencies. In 2023, the Company experienced minimal impact on net income due to foreign exchange rate fluctuations.
Currently, the Company does not use derivative instruments to hedge its economic exposure with respect to assets, liabilities and firm commitments denominated in foreign currencies. In 2024, the Company experienced minimal impact on net income due to foreign exchange rate fluctuations.
Although there can be no assurances, given the size of the Canadian operations, the Company does not expect future foreign exchange gains and losses to be significant. The Company has no derivative financial instruments that expose the Company to significant market risk. - 55 -
Although there can be no assurances, given the size of the Canadian operations, the Company does not expect future foreign exchange gains and losses to be significant. The Company has no derivative financial instruments that expose the Company to significant market risk. - 53 -