US-based rental company McGrath RentCorp has reported overall growth in the first quarter of 2020, though business conditions deteriorated towards the end of the quarter with the onset of the Covid-19 pandemic.
Joe Hanna, President and CEO of McGrath RentCorp, said, “Entering the second quarter, we have experienced varying degrees of weakening demand across our business segments and geographic regions as customers adjust to Covid-19 conditions.”
The company’s total revenues were up 6% year-on-year to $129.5 million, and profits grew by 10% compared to the first quarter of 2019 with adjusted EBITDA (earnings before interest, taxes, depreciation and amortisation) of $54.9 million.
Within that, rental revenue increased by 8% year-on-year to $89.5 million.
Hanna said, “We were pleased with our start to 2020, completing a successful first quarter of top and bottom line growth. Our first quarter company-wide rental revenues grew 8% and operating income grew 9% as we kicked off the year with good business momentum.
Standout performers were Mobile Modular, with continued strength in both classroom and commercial rentals, and TRS-RenTelco, with growth in both general purpose and communications customer segments. We saw fewer rental opportunities at Adler compared to a year ago, as demand conditions continued to be soft.”
The Mobile Modular division’s income rose by 25% compared to the equivalent quarter in 2019, reaching $19.4 million. Rental revenues increased by 12% to $47.4 million, and gross profit on rental revenues grew by 20% to $29.1 million.
The TRS-RenTelco division saw its income rise by 9% to $8.4 million and rental revenues climb by 17% to $27.5 million. Gross profit on rental revenues increased by 13% to $11.3 million.
Meanwhile, the Alder Tanks division suffered a 38% year-on-year drop in its income to $2.7 million, with rental revenues taking a 13% hit and falling to $14.6 million and gross profit on rental revenues down by 19% to $8 million. The decrease was seen across five of the company’s six markets.
Hanna said, “Due to the current circumstances, our ability to see into the future is very limited at this time, and the prolonged impact of Covid-19 conditions on the US economy and our business is unknown.”
For this reason, the company has withdrawn its previously issued 2020 guidance and is not currently providing an updated outlook.
“We have an engaged and dedicated employee team, many long-term customer relationships, and a solid financial foundation,” Hanna went on to say, “All of which I believe will help us successfully navigate through the current uncertainty until more normal conditions return.”