NOTE 7. SEGMENT REPORTING

The Company’s four reportable segments are (1) its modular building and portable storage segment (“Mobile Modular”); (2) its electronic test equipment segment (“TRS-RenTelco”); (3) its containment solutions for the storage of hazardous and non-hazardous liquids and solids segment (“Adler Tanks”); and (4) its classroom manufacturing segment selling modular buildings used primarily as classrooms in California (“Enviroplex”). The operations of each of these segments are described in Part I – Item 1, “Business,” and the accounting policies of the segments are described in “Note 2 – Significant Accounting Policies” in the Company’s annual report on Form 10-K for the year ended December 31, 2017. Management focuses on several key measures to evaluate and assess each segment’s performance, including rental revenue growth, gross profit, income from operations and income before provision for income taxes. Excluding interest expense, allocations of revenue and expense not directly associated with one of these segments are generally allocated to Mobile Modular, TRS-RenTelco and Adler Tanks based on their pro-rata share of direct revenues. Interest expense is allocated among Mobile Modular, TRS-RenTelco and Adler Tanks based on their pro-rata share of average rental equipment at cost, intangible assets, accounts receivable, deferred income and customer security deposits. The Company does not report total assets by business segment. Summarized financial information for the nine months ended September 30, 2018 and 2017 for the Company’s reportable segments is shown in the following table:

(dollar amounts in thousands)	Mobile Modular			TRS- RenTelco			Adler Tanks			Enviroplex ¹		Consolidated
Nine Months Ended September 30,
2018
Rental revenues	$	116,436		$	65,919		$	51,328		$ —		$	233,683
Rental related services revenues		40,510			2,287			18,000		—			60,797
Sales and other revenues		31,667			18,321			916			19,831		70,735
Total revenues		188,613			86,527			70,244			19,831		365,215
Depreciation of rental equipment		15,841			26,536			11,910		—			54,287
Gross profit		86,515			40,155			35,031			6,447		168,148
Selling and administrative expenses		43,191			16,780			22,245			3,617		85,833
Income from operations		43,324			23,375			12,786			2,830		82,315
Interest (expense) income allocation		(5,256	)		(1,999	)		(2,409	)		531		(9,133	)
Income before provision for income taxes		38,068			20,871			10,377			3,361		72,677
Rental equipment acquisitions		40,704			51,744			3,187		—			95,635
Accounts receivable, net (period end)		69,419			18,991			19,876			6,803		115,089
Rental equipment, at cost (period end)		801,129			284,647			312,487		—			1,398,263
Rental equipment, net book value (period end)		558,790			129,816			200,001		—			888,607
Utilization (period end) ²		79.2	%		61.5	%		64.0	%
Average utilization ²		77.8	%		62.4	%		59.8	%

2017
Rental revenues	$	104,923		$	60,569		$	46,220		$ —		$	211,712
Rental related services revenues		38,283			2,095			18,209		—			58,587
Sales and other revenues		30,622			16,493			1,701			20,692		69,508
Total revenues		173,828			79,157			66,130			20,692		339,807
Depreciation of rental equipment		15,951			24,335			11,827		—			52,113
Gross profit		77,939			36,420			31,407			5,890		151,656
Selling and administrative expenses		42,157			16,475			21,855			3,215		83,702
Income from operations		35,782			19,945			9,552			2,675		67,954
Interest (expense) income allocation		(5,008	)		(1,726	)		(2,301	)		311		(8,724	)
Income before provision for income taxes		30,774			18,492			7,251			2,986		59,503
Rental equipment acquisitions		28,107			45,700			3,130		—			76,937
Accounts receivable, net (period end)		66,126			16,253			18,118			6,916		107,413
Rental equipment, at cost (period end)		781,791			258,877			309,825		—			1,350,493
Rental equipment, net book value (period end)		547,115			106,728			211,881		—			865,724
Utilization (period end) ²		76.8	%		64.3	%		59.7	%
Average utilization ²		76.6	%		62.8	%		54.7	%

Gross Enviroplex sales revenues were $21,191 and $20,692 for the nine months ended September 30, 2018 and 2017, respectively. There were $1,360 inter-segment sales to Mobile Modular in the nine months ended September 30, 2018, which required elimination in consolidation. There were no inter-segment sales in the nine months ended September 30, 2017.

Utilization is calculated each month by dividing the cost of rental equipment on rent by the total cost of rental equipment excluding accessory equipment and for Mobile Modular and Adler Tanks excluding new equipment inventory. The Average Utilization for the period is calculated using the average costs of rental equipment.

No single customer accounted for more than 10% of total revenues for the nine months ended September 30, 2018 and 2017. Revenues from foreign country customers accounted for 4% of the Company’s total revenues for the same periods.