LIVERMORE, Calif.--(BUSINESS WIRE)--February 29, 2012--McGrath RentCorp (NASDAQ: MGRC) (the “Company”), a diversified business to business rental company, today announced revenues for the quarter ended December 31, 2011 of $85.2 million, an increase of 7%, compared to $79.9 million in the fourth quarter of 2010. The Company reported net income of $13.2 million, or $0.53 per diluted share for the fourth quarter of 2011, compared to net income of $12.7 million, or $0.52 per diluted share, in the fourth quarter of 2010.

Total revenues for the year ended December 31, 2011 were $342.7 million, compared to $291.4 million in 2010. Rental revenues increased 17% to $234.9 million in 2011 compared to $200.6 million in 2010. Net income for the year ended December 31, 2011 increased 36% to $49.6 million, compared to net income of $36.5 million in the prior year. Diluted earnings per share increased 33% to $2.00 in 2011 from $1.50 in 2010.

The Company also announced that the board of directors declared a quarterly cash dividend of $0.235 per share for the quarter ending March 31, 2012, an increase of 2% over the prior year period. On an annualized basis, the 2012 dividend represents a 2.9% yield, based on the February 28, 2012 closing stock price. The cash dividend will be payable on April 30, 2012 to all shareholders of record on April 16, 2012.

Dennis Kakures, President and CEO of McGrath RentCorp, made the following comments regarding these results and future expectations:

“Our Company-wide 14% increase in rental revenues for the quarter from a year ago reflects very favorable business activity and rental revenue increases in both our tank and electronics rental businesses.

Our tank and box division rental revenues increased 46% to $17.2 million for the quarter, from $11.7 million a year ago. The strong increase in rental revenues was directly related to higher business activity levels and continued expansion of Adler’s rental equipment inventory. Income from operations was up 63% from a year ago to $9.6 million, as the business further leveraged existing employee and facility infrastructure, and also benefited from its base of longer term rentals.

Our electronics division rental revenues for the quarter increased by $2.9 million, or 13%, to $25.3 million from a year ago. Income from operations increased by $1.3 million, or 18%, to $8.6 million. In addition to higher rental revenues, our electronics business also benefited from lower depreciation and laboratory costs as a percentage of rental revenues, as well as slightly higher gross profit on equipment sales from a year ago.

Modular division rental revenues for the fourth quarter decreased by $0.5 million, or 2%, to $20.3 million from a year ago. Rental revenues grew by 15% quarter over quarter in our markets outside of California; however, they declined by 12% within the state. California continues to be plagued by fiscal and budgetary challenges. Quarter over quarter income from operations decreased by 30% from a year ago to $6.1 million; however, modular rental operations gross profit declined only 7%, more closely in line with the reduction in rental revenue. The higher percentage reduction in income from operations was due primarily to higher SG&A expenses associated with the continued expansion of our portable storage rental business and divisional employee costs, as well as lower gross profit on equipment sales.

Our portable storage and environmental test equipment businesses both continued to make good progress in their market penetration, booking levels, and rental revenue growth during the quarter. We continue to work hard to grow both of these initiatives.

During 2011, we had a net addition of over $101 million in original cost of rental assets. These rental products are primarily for the growth of Adler Tank Rentals, and for our test equipment and portable storage businesses. I am very pleased to share that McGrath RentCorp achieved a key milestone in January, 2012, in reaching $1.0 billion in original cost of rental equipment under management. Overall, McGrath RentCorp’s 33% increase in EPS for 2011 over 2010 validates the strategy and prudency of a platform of diverse rental products and geographies.”

All comparisons presented below are for the quarter ended December 31, 2011 to the quarter ended December 31, 2010 unless otherwise indicated.

For the fourth quarter of 2011, the Company’s Mobile Modular division reported a 30% decrease in income from operations to $6.1 million. Rental revenues decreased 2% to $20.3 million and other direct costs increased 2% to $4.7 million, which resulted in a decrease in gross profit on rental revenues of 5% to $12.1 million. Sales revenues decreased 34% to $3.6 million, with gross profit on sales revenues decreasing 42% to $0.9 million due to lower used equipment sales revenues in the fourth quarter of 2011. Selling and administrative expenses increased 15% to $8.1 million, primarily as a result of increased investment in our portable storage growth initiative.

For the fourth quarter of 2011, the Company’s TRS-RenTelco division reported an 18% increase in income from operations to $8.6 million. Rental revenues increased 13% to $25.3 million, which together with flat depreciation expense of $9.5 million and other direct costs increasing from $3.3 million to $3.4 million, resulted in an increase in gross profit on rental revenues of 28% to $12.5 million. Sales revenues increased 2% to $7.1 million, with gross profit on sales increasing 4% to $2.8 million, primarily due to higher gross margins on used equipment sales revenues in the fourth quarter of 2011. Selling and administrative expenses increased 24% to $7.0 million, primarily due to increased salary and benefits costs.

For the fourth quarter of 2011, the Company’s Adler Tanks division reported a 63% increase in income from operations to $9.6 million. Rental revenues increased 46% to $17.2 million, which resulted in an increase in gross profit on rental revenues of 56% to $13.4 million. Rental related services revenues increased 46% to $3.8 million, with gross profit on rental related services revenues doubling to $1.2 million. Selling and administrative expenses increased 46% to $5.0 million, primarily due to increased personnel and benefits costs and bad debt expenses.

You should read this press release in conjunction with the financial statements and notes thereto included in the Company’s latest Forms 10-K and 10-Q and other SEC filings. You can visit the Company’s web site at www.mgrc.com to access the latest Forms 10-K and 10-Q and other SEC filings.

The Company expects 2012 full-year earnings per share to be in a range of $2.02 to $2.12 per diluted share.

In 2012, the Company expects approximately 8% to 10% growth in rental operations revenues over 2011 and sales revenues comparable to 2011. The Company expects strongest revenue growth in Adler Tanks. However, a significant level of uncertainty remains in the California modular rental market. Rental equipment depreciation expense is expected to increase to $65 to $66 million, driven by rental fleet growth. Selling and administrative costs are expected to increase to approximately $84 to $86 million to support business growth, and continued investment in Adler Tanks and our portable storage initiative. Full year interest expense is forecasted to be approximately $9 million. The Company expects the 2012 effective tax rate to be 39.2% and the diluted share count to increase to approximately 25.3 to 25.7 million shares. These forward-looking statements reflect McGrath RentCorp’s expectations as of February 29, 2012. Actual 2012 full-year earnings per share results may be materially different and affected by many factors, including those factors outlined in the “forward-looking statements” paragraph at the end of this press release.

Founded in 1979, McGrath RentCorp is a diversified business-to-business rental company. Under the trade name Mobile Modular Management Corporation (Mobile Modular), it rents and sells modular buildings to fulfill customers’ temporary and permanent classroom and office space needs in California, Texas, Florida, North Carolina, Georgia, Maryland, Virginia and Washington, D.C. The Company’s TRS-RenTelco division rents and sells electronic test equipment and is one of the leading rental providers of general purpose and communications test equipment in the Americas. In 2008, the Company purchased the assets of Adler Tank Rentals, a New Jersey based supplier of rental containment solutions for hazardous and nonhazardous liquids and solids with operations today in the Northeast, Mid-Atlantic, Midwest, Southeast, Southwest and West. Also, in 2008, under the trade name TRS-Environmental, the Company entered the environmental test equipment rental business serving the Americas. In 2008, the Company also entered the portable storage container rental business in Northern California under the trade name Mobile Modular Portable Storage, and in 2009 expanded this business into Southern California, Texas and Florida. For more information on McGrath RentCorp and its operating units, please visit our websites:

Corporate – www.mgrc.com
Tanks and Boxes – www.AdlerTankRentals.com
Modular Buildings – www.MobileModularRents.com
Portable Storage – www.MobileModularRents-PortableStorage.com
Electronic Test Equipment – www.TRS-RenTelco.com
Environmental Test Equipment – www.TRS-Environmental.com
School Facilities Manufacturing – www.Enviroplex.com

As previously announced in its press release of February 8, 2012, McGrath RentCorp will host a conference call at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) on February 29, 2012 to discuss the fourth quarter 2011 results. To participate in the teleconference, dial 1-877-941-1427 (in the U.S.), or 1-480-629-9664 (outside the US), or visit the investor relations section of the Company’s website at www.mgrc.com. Telephone replay of the call will be available for 7 days following the call by dialing 1-800-406-7325 (in the U.S.), or 1-303-590-3030 (outside the U.S.). The pass code for the call replay is 4503262.

Statements in this press release which are not historical facts are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, regarding McGrath RentCorp’s business strategy, future operations, financial position, estimated revenues or losses, projected costs, prospects, plans and objectives are forward looking statements. These forward-looking statements appear in a number of places and can be identified by the use of forward-looking terminology such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “future,” “intend,” “hopes,” “goals” or “certain” or the negative of these terms or other variations or comparable terminology. In particular, the statements made in this press release about the following topics are forward looking statements: fiscal and budgetary challenges in California; continued expansion of our portable storage rental business and environmental test equipment business; continued expansion of Adler Tank's rental equipment inventory; increased investment in our portable storage growth initiative; and our statements under the heading “Financial Guidance.”

Management cautions that forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that could cause our actual results to differ materially from those projected in such forward-looking statements including, without limitation, the following: the continuation of the current recession and financial, budget and credit crises, particularly in California, including the impact on funding for school facility projects and residential and commercial construction sectors, our customers’ need and ability to rent our products, and the Company’s ability to access additional capital in the current uncertain capital and credit market; changes in state funding for education and the timing and impact of federal stimulus monies; the effectiveness of management’s strategies and decisions, general economic, stock market and business conditions, including in the states and countries where we sell or rent our products; continuing demand for our products; hiring, retention and motivation of key personnel; failure by third parties to manufacture and deliver our products in a timely manner and to our specifications; the cost of and our ability to successfully implement information system upgrades; our ability to finance expansion and to locate and consummate acquisitions and to successfully integrate and operate Adler Tanks and other acquisitions; fluctuations in interest rates and the Company’s ability to manage credit risk; our ability to effectively manage our rental assets; the risk that we may be subject to litigation under environmental, health and safety and product liability laws and claims from employees, vendors and other third parties; fluctuations in the Company’s effective tax rate; changes in financial accounting standards; our failure to comply with internal control requirements; catastrophic loss to our facilities; effect on the Company’s Adler Tanks business from reductions to the price of oil or gas; new or modified statutory or regulatory requirements; success of the Company’s strategic growth initiatives; risks associated with doing business with government entities; seasonality of our businesses; intense industry competition including increasing price pressure; our ability to timely deliver, install and redeploy our rental products; significant increases in raw materials, labor, and other costs; and risks associated with operating internationally, including unfavorable exchange rates for the U.S. dollar against our Canadian dollar denominated revenues.

Our future business, financial condition and results of operations could differ materially from those anticipated by such forward-looking statements and are subject to risks and uncertainties including the risks set forth above, those discussed in our Form 10-K for the year ended December 31, 2011 which is expected to be filed with the SEC on February 29, 2012, and those that may be identified from time to time in our reports and registration statements filed with the SEC. Forward-looking statements are made only as of the date of this press release and are based on management’s reasonable assumptions; however, these assumptions can be wrong or affected by known or unknown risks and uncertainties. Readers should not place undue reliance on these forward-looking statements and are cautioned that any such forward-looking statements are not guarantees of future performance. Except as otherwise required by law, we do not undertake any duty to update any of the forward-looking statements after the date of this press release to conform such statements to actual results or to changes in our expectations.

MCGRATH RENTCORP CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

	Three Months Ended December 31,				Twelve Months Ended December 31,
(in thousands, except per share amounts)		2011		2010		2011		2010

REVENUES
Rental	$	62,798	$	54,957	$	234,906	$	200,615
Rental Related Services		10,870		8,984		39,486		34,702
Rental Operations		73,668		63,941		274,392		235,317
Sales		11,176		15,520		66,382		54,055
Other		362		482		1,896		2,028
Total Revenues		85,206		79,943		342,670		291,400

COSTS AND EXPENSES
Direct Costs of Rental Operations
Depreciation of Rental Equipment		15,393		14,734		60,187		56,399
Rental Related Services		8,491		6,821		30,692		26,542
Other		9,380		9,161		39,859		40,007
Total Direct Costs of Rental Operations		33,264		30,716		130,738		122,948
Costs of Sales		7,749		10,772		45,141		37,637
Total Costs of Revenues		41,013		41,488		175,879		160,585
Gross Profit		44,193		38,455		166,791		130,815
Selling and Administrative Expenses		20,843		16,650		78,127		65,579
Income from Operations		23,350		21,805		88,664		65,236
Interest Expense		2,119		1,539		7,606		6,186
Income Before Provision for Income Taxes		21,231		20,266		81,058		59,050
Provision for Income Taxes		8,004		7,523		31,456		22,571
Net Income	$	13,227	$	12,743	$	49,602	$	36,479

Earnings Per Share:
Basic	$	0.54	$	0.53	$	2.04	$	1.52
Diluted	$	0.53	$	0.52	$	2.00	$	1.50
Shares Used in Per Share Calculation:
Basic		24,431		24,085		24,349		23,944
Diluted		24,892		24,500		24,760		24,289

Cash Dividends Declared Per Share	$	0.230	$	0.225	$	0.920	$	0.900

MCGRATH RENTCORP
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
	December 31,			December 31,
(in thousands)		2011			2010

ASSETS
Cash	$	1,229		$	990
Accounts Receivable, net of allowance for doubtful
accounts of $1,500 in 2011 and $1,700 in 2010		92,671			76,488
Income Taxes Receivable		—			6,131

Rental Equipment, at cost:
Relocatable Modular Buildings		539,147			514,548
Electronic Test Equipment		258,586			250,125
Liquid and Solid Containment Tanks and Boxes		201,456			133,095
		999,189			897,768
Less Accumulated Depreciation		(326,043	)		(306,188	)
Rental Equipment, net		673,146			591,580

Property, Plant and Equipment, net		94,702			83,861
Prepaid Expenses and Other Assets		17,170			13,944
Intangible Assets, net		12,311			12,868
Goodwill		27,700			27,700
Total Assets	$	918,929		$	813,562

LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Notes Payable	$	296,500		$	265,640
Accounts Payable and Accrued Liabilities		58,854			49,612
Deferred Income		25,067			23,790
Deferred Income Taxes, net		205,366			179,543
Total Liabilities		585,787			518,585

Shareholders’ Equity:
Common Stock, no par value -
Authorized -- 40,000 shares
Issued and Outstanding -- 24,576 shares in 2011 and
24,235 shares in 2010		74,878			63,623
Retained Earnings		258,264			231,354
Total Shareholders’ Equity		333,142			294,977
Total Liabilities and Shareholders’ Equity	$	918,929		$	813,562

MCGRATH RENTCORP
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
	Year Ended December 31,
(in thousands)		2011			2010

CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	49,602		$	36,479
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation and Amortization		67,395			62,577
Provision for Doubtful Accounts		1,755			1,494
Non-Cash Stock-Based Compensation		5,221			4,227
Gain on Sale of Used Rental Equipment		(12,444	)		(11,728	)
Change In:
Accounts Receivable		(17,938	)		(7,385	)
Income Taxes Receivable		6,131			120
Prepaid Expenses and Other Assets		(3,226	)		296
Accounts Payable and Accrued Liabilities		5,715			3,399
Deferred Income		1,277			(954	)
Deferred Income Taxes		25,823			12,073
Net Cash Provided by Operating Activities		129,311			100,598

CASH FLOWS FROM INVESTING ACTIVITIES:
Payments related to Acquisition of Adler Tanks		—			(39	)
Purchase of Rental Equipment		(154,963	)		(122,749	)
Purchase of Property, Plant and Equipment		(17,204	)		(12,144	)
Proceeds from Sale of Used Rental Equipment		28,453			28,694
Net Cash Used in Investing Activities		(143,714	)		(106,238	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Net Borrowings (Payments) Under Bank Lines of Credit		(57,140	)		30,306
Borrowings Under Private Placement		100,000			—
Principal Payments on Senior Notes		(12,000	)		(12,000	)
Proceeds from the Exercise of Stock Options		5,054			7,506
Excess Tax Benefit from Equity Awards		980			1,021
Payment of Dividends		(22,252	)		(21,390	)
Net Cash Provided by Financing Activities		14,642			5,443

Net Increase (Decrease) in Cash		239			(197	)
Cash Balance, beginning of period		990			1,187
Cash Balance, end of period	$	1,229		$	990

Interest Paid, during the period	$	6,877		$	6,306
Net Income Taxes Paid (Refunds Received), during the period	$	(1,480	)	$	9,342
Dividends Accrued	$	5,952		$	5,513
Rental Equipment Acquisitions, not yet paid	$	8,186		$	5,388

MCGRATH RENTCORP BUSINESS SEGMENT DATA (unaudited) Three Months Ended December 31, 2011

(dollar amounts in thousands)	Mobile Modular			TRS- RenTelco			Adler Tanks			Enviroplex			Consolidated
Revenues
Rental	$	20,280		$	25,324		$	17,194		$	—		$	62,798
Rental Related Services		6,177			860			3,833			—			10,870
Rental Operations		26,457			26,184			21,027			—			73,668
Sales		3,631			7,131			41			373			11,176
Other		111			208			43			—			362
Total Revenues		30,199			33,523			21,111			373			85,206

Costs and Expenses
Direct Costs of Rental Operations:
Depreciation of Rental Equipment		3,474			9,478			2,441			—			15,393
Rental Related Services		5,047			834			2,610			—			8,491
Other		4,677			3,370			1,333			—			9,380
Total Direct Costs of Rental Operations		13,198			13,682			6,384			—			33,264
Costs of Sales		2,778			4,333			161			477			7,749
Total Costs of Revenues		15,976			18,015			6,545			477			41,013

Gross Profit (Loss)
Rental		12,129			12,476			13,420			—			38,025
Rental Related Services		1,130			26			1,223			—			2,379
Rental Operations		13,259			12,502			14,643			—			40,404
Sales		853			2,798			(120	)		(104	)		3,427
Other		111			208			43			—			362
Total Gross Profit		14,223			15,508			14,566			(104	)		44,193
Selling and Administrative Expenses		8,104			6,955			4,994			790			20,843
Income (Loss) from Operations	$	6,119		$	8,553		$	9,572		$	(894	)		23,350
Interest Expense														2,119
Provision for Income taxes														8,004
Net Income													$	13,227

Other Information
Average Rental Equipment ¹	$	512,757		$	264,840		$	184,365
Average Monthly Total Yield ²		1.32	%		3.19	%		3.11	%
Average Utilization ³		67.1	%		67.7	%		86.8	%
Average Monthly Rental Rate ⁴		1.96	%		4.71	%		3.58	%

MCGRATH RENTCORP BUSINESS SEGMENT DATA (unaudited) Three Months Ended December 31, 2010

(dollar amounts in thousands)	Mobile Modular			TRS- RenTelco			Adler Tanks			Enviroplex		Consolidated
Revenues
Rental	$	20,759		$	22,457		$	11,741		$	—	$	54,957
Rental Related Services		5,741			618			2,625			—		8,984
Rental Operations		26,500			23,075			14,366			—		63,941
Sales		5,543			6,997			150			2,830		15,520
Other		87			378			17			—		480
Total Revenues		32,130			30,450			14,533			2,830		79,943

Costs and Expenses
Direct Costs of Rental Operations:
Depreciation of Rental Equipment		3,443			9,490			1,801			—		14,734
Rental Related Services		4,256			547			2,018			—		6,821
Other		4,584			3,250			1,327			—		9,161
Total Direct Costs of Rental Operations		12,283			13,287			5,146			—		30,716
Costs of Sales		4,071			4,319			106			2,276		10,772
Total Costs of Revenues		16,354			17,606			5,252			2,276		41,488

Gross Profit (Loss)
Rental		12,732			9,717			8,613			—		31,062
Rental Related Services		1,485			71			607			—		2,163
Rental Operations		14,217			9,788			9,220			—		33,225
Sales		1,472			2,678			44			554		4,748
Other		87			378			17			—		482
Total Gross Profit		15,776			12,844			9,281			554		38,455
Selling and Administrative Expenses		7,070			5,623			3,411			546		16,650
Income from Operations	$	8,706		$	7,221		$	5,870		$	8		21,805
Interest Expense													1,539
Provision for Income taxes													7,523
Net Income												$	12,743

Other Information
Average Rental Equipment ¹	$	496,397		$	250,651		$	122,964
Average Monthly Total Yield ²		1.39	%		2.99	%		3.18	%
Average Utilization ³		67.4	%		66.2	%		81.8	%
Average Monthly Rental Rate ⁴		2.07	%		4.51	%		3.89	%

MCGRATH RENTCORP BUSINESS SEGMENT DATA (unaudited) Twelve Months Ended December 31, 2011

(dollar amounts in thousands)	Mobile Modular			TRS- RenTelco			Adler Tanks			Enviroplex		Consolidated
Revenues
Rental	$	79,969		$	95,694		$	59,243		$	—	$	234,906
Rental Related Services		24,063			3,133			12,290			—		39,486
Rental Operations		104,032			98,827			71,533			—		274,392
Sales		20,152			25,164			278			20,788		66,382
Other		425			1,324			147			—		1,896
Total Revenues		124,609			125,315			71,958			20,788		342,670

Costs and Expenses
Direct Costs of Rental Operations:
Depreciation of Rental Equipment		13,780			38,039			8,368			—		60,187
Rental Related Services		18,835			2,848			9,009			—		30,692
Other		21,940			13,272			4,647			—		39,859
Total Direct Costs of Rental Operations		54,555			54,159			22,024			—		130,738
Costs of Sales		14,861			14,087			315			15,878		45,141
Total Costs of Revenues		69,416			68,246			22,339			15,878		175,879

Gross Profit (Loss)
Rental		44,249			44,383			46,228			—		134,860
Rental Related Services		5,228			285			3,281			—		8,794
Rental Operations		49,477			44,668			49,509			—		143,654
Sales		5,291			11,077			(37	)		4,910		21,241
Other		425			1,324			147			—		1,896
Total Gross Profit		55,193			57,069			49,619			4,910		166,791
Selling and Administrative Expenses		32,131			25,921			16,698			3,377		78,127
Income from Operations	$	23,062		$	31,148		$	32,921		$	1,533		88,664
Interest Expense													7,606
Provision for Income taxes													31,456
Net Income												$	49,602

Other Information
Average Rental Equipment ¹	$	504,276		$	258,995		$	157,917
Average Monthly Total Yield ²		1.32	%		3.08	%		3.13	%
Average Utilization ³		67.1	%		66.0	%		86.2	%
Average Monthly Rental Rate ⁴		1.97	%		4.66	%		3.63	%

MCGRATH RENTCORP BUSINESS SEGMENT DATA (unaudited) Twelve Months Ended December 31, 2010

(dollar amounts in thousands)	Mobile Modular			TRS- RenTelco			Adler Tanks			Enviroplex		Consolidated
Revenues
Rental	$	82,648		$	82,540		$	35,427		$	—	$	200,615
Rental Related Services		22,947			2,240			9,515			—		34,702
Rental Operations		105,595			84,780			44,942			—		235,317
Sales		20,685			21,443			232			11,695		54,055
Other		432			1,539			57			—		2,028
Total Revenues		126,712			107,762			45,231			11,695		291,400

Costs and Expenses
Direct Costs of Rental Operations:
Depreciation of Rental Equipment		13,734			37,017			5,648			—		56,399
Rental Related Services		17,156			2,001			7,385			—		26,542
Other		23,087			12,587			4,333			—		40,007
Total Direct Costs of Rental Operations		53,977			51,605			17,366			—		122,948
Costs of Sales		15,833			12,682			180			8,942		37,637
Total Costs of Revenues		69,810			64,287			17,546			8,942		160,585

Gross Profit
Rental		45,827			32,936			25,446			—		104,209
Rental Related Services		5,791			239			2,130			—		8,160
Rental Operations		51,618			33,175			27,576			—		112,369
Sales		4,852			8,761			52			2,753		16,418
Other		432			1,539			57			—		2,028
Total Gross Profit		56,902			43,475			27,685			2,753		130,815
Selling and Administrative Expenses		28,309			22,421			12,161			2,688		65,579
Income from Operations	$	28,593		$	21,054		$	15,524		$	65		65,236
Interest Expense													6,186
Provision for Income taxes													22,571
Net Income												$	36,479

Other Information
Average Rental Equipment ¹	$	491,364		$	244,425		$	101,263
Average Monthly Total Yield ²		1.40	%		2.81	%		2.92	%
Average Utilization ³		67.7	%		66.0	%		76.0	%
Average Monthly Rental Rate ⁴		2.07	%		4.26	%		3.84	%

Reconciliation of Adjusted EBITDA to the most directly comparable GAAP measures

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, and non-cash stock-based compensation. The Company presents Adjusted EBITDA as a financial measure as management believes it provides useful information to investors regarding the Company’s liquidity and financial condition and because management, as well as the Company’s lenders, use this measure in evaluating the performance of the Company.

Management uses Adjusted EBITDA as a supplement to GAAP measures to further evaluate the Company’s period-to-period operating performance, compliance with financial covenants in the Company’s revolving lines of credit and senior notes and evaluate the Company’s ability to meet future capital expenditure and working capital requirements. Management believes the exclusion of non-cash charges, including stock-based compensation, 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.

Adjusted EBITDA should not be considered in isolation or as a substitute for net income, cash flows, or other consolidated income or cash flow data prepared in accordance with GAAP or as a measure of the Company’s profitability or liquidity. 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 stock-based compensation charges. The Company believes that Adjusted EBITDA is of limited use in that it does not reflect all of the amounts associated with the Company’s results of operations as determined in accordance with GAAP and does not accurately reflect real cash flow. In addition, other companies may not use Adjusted EBITDA or may use other non-GAAP measures, limiting the usefulness of Adjusted EBITDA for purposes of comparison. The Company’s presentation of Adjusted EBITDA should not be construed as an inference that the Company will not incur expenses that are the same as or similar to the adjustments in this presentation. Therefore, Adjusted EBITDA should only be used to evaluate the Company’s results of operations in conjunction with the corresponding GAAP measures. The Company compensates for the limitations of Adjusted EBITDA by relying upon GAAP results to gain a complete picture of the Company’s performance. Because Adjusted EBITDA is a non-GAAP financial measure as defined by the Securities and Exchange Commission, the Company includes in the tables below reconciliations of Adjusted EBITDA to the most directly comparable financial measures calculated and presented in accordance with GAAP.

Reconciliation of Net Income to Adjusted EBITDA

(dollar amounts in thousands)	Three Months Ended December 31,						Twelve Months Ended December 31,
		2011			2010			2011			2010
Net Income	$	13,227		$	12,743		$	49,602		$	36,479
Provision for Income Taxes		8,004			7,523			31,456			22,571
Interest		2,119			1,539			7,606			6,186
Income from Operations		23,350			21,805			88,664			65,236
Depreciation and Amortization		17,649			16,308			67,395			62,577
Non-Cash Stock-Based Compensation		1,512			1,072			5,221			4,227
Adjusted EBITDA ¹	$	42,511		$	39,185		$	161,280		$	132,040

Adjusted EBITDA Margin ²		50	%		49	%		47	%		45	%

Reconciliation of Adjusted EBITDA to Net Cash Provided by Operating Activities

(dollar amounts in thousands)	Three Months Ended December 31,						Twelve Months Ended December 31,
		2011			2010			2011			2010
Adjusted EBITDA ¹	$	42,511		$	39,185		$	161,280		$	132,040
Interest Paid		(3,171	)		(1,776	)		(6,877	)		(6,306	)
Net Income Taxes (Paid) Refunds Received		4,915			(1,312	)		1,480			(9,342	)
Gain on Sale of Rental Equipment		(2,731	)		(3,583	)		(12,444	)		(11,728	)
Change in certain assets and liabilities:
Accounts Receivable, net		(3,030	)		12,423			(16,183	)		(5,891	)
Prepaid Expenses and Other Assets		(3,117	)		1,645			(3,226	)		296
Accounts Payable and Other Liabilities		(10,198	)		(3,780	)		4,004			2,483
Deferred Income		(364	)		(8,351	)		1,277			(954	)
Net Cash Provided by Operating Activities	$	24,815		$	34,451		$	129,311		$	100,598

California
(State or other jurisdiction of incorporation)

0-13292		94-2579843
(Commission File Number)		(I.R.S. Employer Identification No.)

(d)	Exhibits.

	Exhibit No.	Description

	99.1	Press Release of McGrath RentCorp, dated February 29, 2012.

		McGRATH RENTCORP

Dated:	February 29, 2012	By:	/s/	Keith E. Pratt
				Keith E. Pratt
				Senior Vice President and
				Chief Financial Officer