-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QTxVHeEHjMYKruqeuQT/H0p/EQ9uwn52rUAi8UFMm1rKIS6h/FWFD7Yr8OarxDtS Lp6AknZ6njMTFXELdKeTRA== 0001157523-03-006100.txt : 20031030 0001157523-03-006100.hdr.sgml : 20031030 20031030160223 ACCESSION NUMBER: 0001157523-03-006100 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20031030 ITEM INFORMATION: FILED AS OF DATE: 20031030 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MCGRATH RENTCORP CENTRAL INDEX KEY: 0000752714 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EQUIPMENT RENTAL & LEASING, NEC [7359] IRS NUMBER: 942579843 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-13292 FILM NUMBER: 03966791 BUSINESS ADDRESS: STREET 1: 5700 LAS POSITAS RD CITY: LIVERMORE STATE: CA ZIP: 94550 BUSINESS PHONE: 5102762626 MAIL ADDRESS: STREET 1: 5700 LAS POSITAS RD CITY: LIVERMORE STATE: CA ZIP: 94550 8-K 1 a4505702.txt MCGRATH RENTCORP ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 ----------------------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): October 30, 2003 ----------------------------- McGRATH RENTCORP (Exact name of registrant as specified in its Charter) California (State or other jurisdiction of incorporation) 0-13292 94-2579843 (Commission File Number) (I.R.S. Employee Identification No.) 5700 Las Positas Road, Livermore, CA 94551-7800 (Address of principal executive offices) (925) 606-9200 (Registrant's Telephone Number, Including Area Code) ----------------------------- ================================================================================ 1 Item 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION (c) Exhibits. Exhibit No. Description ----------- ----------- 99.1 Press Release of McGrath RentCorp, dated October 30, 2003. On October 30, 2003, McGrath RentCorp (the "Company") announced via press release the Company's results for its third quarter ended October 30, 2003. A copy of the Company's press release is attached hereto as Exhibit 99.1. This Form 8-K and the attached exhibit are provided under Item 12 of Form 8-K and are furnished to, but not filed with, the Securities and Exchange Commission. 2 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. McGRATH RENTCORP Dated: October 30, 2003 By: /s/ Thomas J. Sauer ---------------------------------------- Thomas J. Sauer Vice President and Chief Financial Officer 3 EX-99 3 a45050702ex99.txt EXHIBIT 99.1 PRESS RELEASE Exhibit 99.1 McGrath RentCorp Announces Third Quarter Results; Q3 2003 EPS of $0.50 LIVERMORE, Calif.--(BUSINESS WIRE)--xx--McGrath RentCorp (NASDAQ: MGRC), a leading rental provider of modular buildings for classroom and office space, and test equipment for communications, fiber optic and general purpose needs, today announced revenues for the quarter ended September 30, 2003 of $34.9 million, compared to $42.0 million in third quarter 2002. The Company reported net income of $6.1 million, or $0.50 per share, compared to $8.5 million, or $0.68 per share, in third quarter 2002. Third quarter 2002 results included a nonrecurring expense reimbursement of $1.25 million related to the terminated Tyco merger, which increased net income by $0.8 million or $0.06 per share. For comparability, excluding the expense reimbursement, third quarter net income would have decreased 21% from $7.7 million, or $0.62 per share, in 2002 to $6.1 million, or $0.50 per share in 2003. The Company's Mobile Modular division had very high shipping levels of classroom product during the quarter, which were offset by unexpected project delays by customers, lower average rental rates and equipment returns. Mobile Modular's rental revenues decreased 3% and sales revenues decreased 11% contributing to a 5% overall decline in total revenues. The reduction in revenues led to a 23% decline of Mobile Modular's pre-tax income to $8.4 million, representing 82% of the Company's total pre-tax income for the quarter. For Enviroplex, the Company's classroom manufacturer, sales revenues declined 57% to $3.0 million as quarter end projects in process of $3.7 million caused a higher than expected backlog of $7.1 million compared to $2.8 million a year ago. The Company's RenTelco division increased quarterly rental revenues by 14% on a sequential basis to $3.4 million from $3.0 million in second quarter 2003 and contributed $1.2 million pre-tax earnings primarily as a result of selling underutilized equipment. The rental revenue increase may not be reflective of improving fundamentals, given the continuing difficult conditions throughout the telecommunications industry. "This quarter marks a return to sequential rental revenue growth for Mobile Modular from $15.2 million to $16.2 million, which had previously experienced three consecutive quarterly declines," stated Dennis Kakures, President and CEO. "Although we've had a very strong year in modular classroom rental bookings, we have also experienced unexpected project delays by customers, lower average rental rates from tightening budgets, and an increased number of equipment returns from completed projects. The impact of having had a very favorable year in modular classroom bookings combined with these off-setting factors has lowered the rental revenue growth rate in the third quarter. Despite these off-setting factors, we still are expecting our highest ever fourth quarter rental revenues for Mobile Modular, which makes us confident in reconfirming our previously provided guidance range of $1.75 to $1.85 per share. This higher run rate will also benefit us heading into 2004." Kakures continued, "Our communications test equipment business experienced its second sequential quarterly increase in rental revenues. This is the first time this has occurred since early 2001. Although the trend is encouraging, we do not believe it yet reflects a sustained recovery for the business." Total revenues for the nine months ended September 30, 2003, were $93.9 million compared to $110.2 million in the same nine-month period in 2002. Net income for the nine months ended September 30, 2003, was $15.7 million or $1.28 per share, compared to $4.9 million, or $0.39 per share, in the prior-year period. The nine-month 2002 results include noncash RenTelco impairment charges of $24.1 million, which reduced net income by $14.5 million or $1.15 per share and net nonrecurring income related to the terminated Tyco merger, which increased net income by $0.4 million, or $0.03 per share. THIRD QUARTER 2003 HIGHLIGHTS (AS COMPARED TO THIRD QUARTER 2002) -- Rental revenues decreased 3% to $19.6 million. Within rental revenues, Mobile Modular decreased 3% to $16.2 million primarily due to unexpected project delays by customers, lower average rental rates and equipment returns; and RenTelco decreased 2% to $3.4 million as a result of the severe and prolonged broad-based weakness in the telecommunications industry. -- Sales revenues decreased 32% to $10.7 million resulting from decreased equipment sales by Enviroplex, Mobile Modular and RenTelco. Overall gross profit on sales decreased from $3.9 million in 2002 to $3.4 million in 2003. Sales can fluctuate from quarter to quarter and year to year depending on customer requirements and funding. -- Depreciation of rental equipment remained at $3.2 million for the quarter. Within depreciation expense, Mobile Modular's depreciation expense increased 9% to $1.9 million and RenTelco's depreciation expense decreased 10% to $1.3 million, resulting primarily from the sale of underutilized electronics equipment. -- Operating cash flow decreased 24% to $13.8 million, primarily due to lower earnings for the quarter. Debt decreased $2.2 million to $56.0 million, with the Company's total liabilities to equity ratio increasing from 1.34 to 1 at June 30, 2003 to 1.43 to 1 as of September 30, 2003. At September 30, 2003, the Company, under existing bank lines of credit, has capacity to borrow up to an additional $85.0 million. -- Dividend rate increased to $0.20 per share for the third quarter 2003. On an annualized basis, this dividend represented a 2.7% yield on the October 29, 2003 close price of $29.76. It is suggested that the press release be read in conjunction with the financial statements and notes thereto included in the Company's latest Form 10-K and Forms 10-Q. You can visit the Company's web site at www.mgrc.com to access information on McGrath RentCorp, including the latest filings on Form 10-K and Forms 10-Q. About McGrath RentCorp Founded in 1979, the Company, under the trade name Mobile Modular Management Corporation, rents and sells modular buildings to fulfill customer's temporary and permanent space needs in California and Texas. Mobile Modular believes it is the largest provider of relocatable classrooms for rental to school districts for grades K - 12 in California. McGrath RentCorp's majority owned subsidiary, Enviroplex, Inc., manufactures and sells classrooms directly to school districts in California. The Company's RenTelco division rents and sells electronic test equipment and is recognized as the leader in communications and fiber-optic test equipment rentals throughout the U.S. CONFERENCE CALL NOTE: As previously announced in its press release of October 2, 2003, McGrath RentCorp will host a conference call at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) on October 30, 2003 to discuss the third quarter 2003 results. To participate in the teleconference, dial 1-800-219-6110 (international callers dial 1-303-262-2075). In addition, a live Web cast and replay of the call may be found in the investor relations section of the Company's website at www.mgrc.com. Telephone replay of the call will be available for 48 hours following the call by dialing 1-800-405-2236 (in the U.S.) or 1-303-590-3000 (outside the U.S.). The pass code for the call replay is 554966#. NON-GAAP FINANCIAL MEASURES: This press release includes financial measures for earnings per share and net income that have not been calculated in accordance with generally accepted accounting principles (GAAP). These differ from GAAP in that they exclude from the 2002 nine month results noncash impairment charges of $24.1 million, which were taken by the Company's RenTelco segment and primarily affected the carrying value of its communications rental equipment, and net nonrecurring income items related to the terminated merger with Tyco International of $0.4 million. McGrath RentCorp provides these measurements because they provide a consistent basis for comparison between quarters without the effect of one-time events. The net income and earnings per share contained in the attached unaudited financial statement are presented and have been calculated in accordance with GAAP. This press release contains statements, which constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements appear in a number of places. Such statements can be identified by the use of forward-looking terminology such as "believes", "expects", "may", "estimates", "will", "should", "plans" or "anticipates" or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy. These include our statements regarding guidance on per share earnings for 2003, the impact of high shipping levels of rental classrooms during the third quarter of 2003, the expectation of fourth quarter 2003 modular rental revenues to be the highest fourth quarter rental revenue level ever, the expected benefits of a higher run rate going into 2004, the expectation of a trend in sequential quarterly rental revenue increases for communications test equipment, and the annualized dividend yield. These forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties. Actual results may vary materially from those in the forward-looking statements as a result of various factors. These factors include the effectiveness of management's strategies and decisions, general economic and business conditions, the condition of the telecommunications industry, new or modified statutory or regulatory requirements, continuing demand for modular products, timely delivery and installation of modular products, delays of future sales projects into 2004 and changing prices and market conditions. There may be other factors not listed above that could cause actual results to vary materially from the forward-looking statements described in this press release. MCGRATH RENTCORP Consolidated earnings, balance sheet and segment data follow: (in thousands, except per share amounts) - ---------------------------------------------------------------------- Three Months Ended Nine Months Ended September 30 September 30 ----------------- ----------------- 2003 2002 2003 2002 - --------------------------------- -------- --------- -------- -------- REVENUES - -------- Rental $19,592 $20,202 $56,252 $62,152 Rental Related Services 4,350 4,483 11,554 12,773 --------- --------- -------- -------- Rental Operations 23,942 24,685 67,806 74,925 Sales 10,719 15,752 25,496 33,061 Other 194 1,513 598 2,204 --------- --------- -------- -------- Total Revenues 34,855 41,950 93,900 110,190 ------- ----------- ------- -------- COSTS AND EXPENSES - ------------------ Direct Costs of Rental Operations Depreciation of Rental Equipment 3,226 3,222 9,468 12,327 Rental Related Services 2,501 2,362 6,874 6,913 Impairment of Rental Equipment -- -- -- 24,083 Other 5,323 4,135 14,544 14,076 ------- ----------- ------- -------- Total Direct Costs of Rental Operations 11,050 9,719 30,866 57,399 Costs of Sales 7,284 11,825 17,830 24,035 ------- ----------- ------- -------- Total Costs 18,334 21,544 48,716 81,434 ------- ----------- ------- -------- Gross Margin 16,521 20,406 45,184 28,756 Selling and Administrative 5,623 5,084 16,873 17,103 ------- ----------- ------- -------- Income from Operations 10,898 15,322 28,311 11,653 Interest 647 951 2,085 3,175 ------- ----------- ------- -------- Income Before Provision for Income Taxes 10,251 14,371 26,226 8,478 Provision for Income Taxes 4,090 5,719 10,464 3,374 --------- --------- -------- -------- Income Before Minority Interest 6,161 8,652 15,762 5,104 Minority Interest in Income of Subsidiary 95 159 89 182 --------- --------- -------- -------- Net Income $6,066 $8,493 $15,673 $4,922 ========= ========= ======== ======== Earnings Per Share: Basic $0.50 $0.68 $1.29 $0.39 Diluted $0.50 $0.68 $1.28 $0.39 Shares Used in Per Share Calculation: Basic 12,080 12,483 12,127 12,462 Diluted 12,242 12,556 12,254 12,628 September 30, December 31, BALANCE SHEET DATA 2003 2002 - ------------------- ----------------- ----------------- Rental Equipment, net $232,443 $221,899 Total Assets 337,087 313,134 Notes Payable 55,961 55,523 Shareholders' Equity 138,684 139,019 SEGMENT DATA (UNAUDITED) Modulars Elec- Enviro- Corporate Consoli- tronics plex (1) dated -------- -------- -------- -------- -------- Three Months Ended September 30, - ------------- 2003 Rental Revenues $16,163 $3,429 $-- $-- $19,592 Rental Related Services Revenues 4,199 151 -- -- 4,350 Sales and Other Revenues 5,917 2,009 2,987 -- 10,913 Total Revenues 26,279 5,589 2,987 -- 34,855 Depreciation of Rental Equipment 1,883 1,343 -- -- 3,226 Interest Expense (Income) Allocation 603 80 (36) -- 647 Income before Provision for Income Taxes 8,395 1,212 644 -- 10,251 Rental Equipment Acquisitions 12,237 1,870 -- -- 14,107 Accounts Receivable, net (period end) 32,656 3,943 5,791 -- 42,390 Rental Equipment, at cost (period end) 303,021 36,509 -- -- 339,530 Rental Equipment, net book value (period end) 214,374 18,069 -- -- 232,443 Utilization (period end) (2) 85.8% 48.6% Average Utilization (2) 85.1% 47.1% 2002 Rental Revenues $16,717 $3,485 $-- $-- $20,202 Rental Related Services Revenues 4,337 146 -- -- 4,483 Sales and Other Revenues 6,667 2,336 7,012 1,250 17,265 Total Revenues 27,721 5,967 7,012 1,250 41,950 Depreciation of Rental Equipment 1,729 1,493 -- -- 3,222 Interest Expense (Income) Allocation 866 141 (56) -- 951 Income before Provision for Income Taxes 10,834 1,001 1,286 1,250 14,371 Rental Equipment Acquisitions 2,807 773 -- -- 3,580 Accounts Receivable, net (period end) 30,889 3,647 5,828 -- 40,364 Rental Equipment, at cost (period end) 286,887 42,208 -- -- 329,095 Rental Equipment, net book value (period end) 201,656 23,666 -- -- 225,322 Utilization (period end) (2) 86.4% 44.7% Average Utilization (2) 86.1% 43.2% - ---------------------------------------------------------------------- SEGMENT DATA (UNAUDITED) Modulars Elec- Enviro- Corporate Consoli- tronics plex (1) dated -------- -------- -------- -------- -------- Nine Months Ended September 30, - ------------- 2003 Rental Revenues $47,073 $9,179 $-- $-- $56,252 Rental Related Services Revenues 11,152 402 -- -- 11,554 Sales and Other Revenues 13,253 5,729 7,112 -- 26,094 Total Revenues 71,478 15,310 7,112 -- 93,900 Depreciation of Rental Equipment 5,405 4,063 -- -- 9,468 Impairment of Rental Equipment -- -- -- -- -- Interest Expense (Income) Allocation 1,948 272 (135) -- 2,085 Income before Provision for Income Taxes 23,397 2,233 596 -- 26,226 Rental Equipment Acquisitions 23,017 4,053 -- -- 27,070 Accounts Receivable, net (period end) 32,656 3,943 5,791 -- 42,390 Rental Equipment, at cost (period end) 303,021 36,509 -- -- 339,530 Rental Equipment, net book value (period end) 214,374 18,069 -- -- 232,443 Utilization (period end) (2) 85.8% 48.6% Average Utilization (2) 84.0% 45.2% 2002 Rental Revenues $49,664 $12,488 $-- $-- $62,152 Rental Related Services Revenues 12,342 431 -- -- 12,773 Sales and Other Revenues 14,997 7,703 11,315 1,250 35,265 Total Revenues 77,003 20,622 11,315 1,250 110,190 Depreciation of Rental Equipment 5,165 7,162 -- -- 12,327 Impairment of Rental Equipment -- 24,083 -- -- 24,083 Interest Expense (Income) Allocation 2,705 634 (164) -- 3,175 Income before Provision for Income Taxes 29,239 (22,892) 1,474 657 8,478 Rental Equipment Acquisitions 14,051 2,099 -- -- 16,150 Accounts Receivable, net (period end) 30,889 3,647 5,828 -- 40,364 Rental Equipment, at cost (period end) 286,887 42,208 -- -- 329,095 Rental Equipment, net book value (period end) 201,656 23,666 -- -- 225,322 Utilization (period end) (2) 86.4% 44.7% Average Utilization (2) 86.0% 37.2% - ---------------------------------------------------------------------- (1) Corporate includes nonrecurring items related to the terminated merger with Tyco International in 2002, which were not allocated to a specific segment. (2) Utilization is calculated each month by dividing the cost of rental equipment on rent by the total cost of rental equipment excluding new equipment inventory and accessory equipment. The average utilization for the period is calculated using the average costs of rental equipment. CONTACT: McGrath RentCorp Thomas J. Sauer, 925-606-9200 -----END PRIVACY-ENHANCED MESSAGE-----