McGrath RentCorp Q2 Earnings Call Highlights

McGrath RentCorp NASDAQ: MGRC reported second-quarter results that reflected continued growth in rental operations, led by its Mobile Modular and TRS-RenTelco businesses, while lower equipment sales and delayed project completions weighed on total revenue and earnings. Total revenue declined 6% year over year to $221 million, while adjusted EBITDA fell 4% to $83 million. Rental operations revenue increased 6%, but the gains were offset by lower new-equipment sales at Enviroplex and Mobile Modular, Chief Executive Officer Phil Hawkins said during the company’s July 29 earnings call.

“We delivered rental operations revenue growth in a mixed demand environment,” Hawkins said, adding that the company sees momentum heading into the second half of 2026.

Mobile Modular revenue declined 4% to $150 million and adjusted EBITDA decreased 4% to $51 million in the quarter. However, rental revenue rose 2%, supported by commercial customers and an 8% increase in rental-related services revenue. Bookings increased 11% from a year earlier, while average fleet utilization improved sequentially to 70.1% from 70.0% in the first quarter. Utilization ended the quarter at 70.6%, as shipments exceeded returns. The company said units on rent increased for four consecutive months, ending the quarter above the level at the start of the year.

Hawkins characterized the development as a meaningful shift after a lengthy period of declining utilization, though management cautioned that improvement may not occur in a straight line each quarter. “We do believe we turned the corner on a trend on the modular side and have strong momentum entering the second half of the year,” Hawkins said. Management attributed the improvement to a combination of larger commercial project wins and the company’s geographic expansion efforts. It cited the Pacific Northwest, Midwest and Northeast as areas where McGrath is gaining traction after adding sales coverage and deploying fleet capital. Monthly revenue per unit on rent increased 7% to $902. For units shipped during the past 12 months, average monthly revenue per unit was up 7% to $1,252, which Chief Financial Officer Keith Pratt said provides a pricing tailwind as the fleet turns over. Mobile Modular Plus revenue rose to $10.5 million from $9.2 million a year earlier. Site-related services revenue was $6 million, down from $6.5 million in the prior-year quarter but ahead of 2025 levels on a year-to-date basis. Rental margins at Mobile Modular declined to 55% from 58%, as inventory center costs rose $2.1 million to prepare equipment for anticipated stronger demand and shipment activity in the second half.

Project Timing Pressures Sales Revenue Mobile Modular sales revenue decreased $9.3 mill...