Segment Reporting

6 Months Ended

Jun. 30, 2020

Segment Reporting [Abstract]

Segment Reporting

NOTE 7. SEGMENT REPORTING

The Company’s four reportable segments are (1) its modular building and portable storage container rental 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 1 – Summary of Significant Accounting Policies” in the Company’s 2019 Annual Report. 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 six months ended June 30, 2020 and 2019 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
Six Months Ended June 30,
2020
Rental revenues	$	94,038		$	53,548		$	27,549		$	—		$	175,135
Rental related services revenues		32,607			1,496			10,883		—				44,986
Sales and other revenues		23,315			12,098			890			10,702			47,005
Total revenues		149,960			67,142			39,322			10,702			267,126
Depreciation of rental equipment		11,406			23,582			8,233		—				43,221
Gross profit		74,301			28,958			17,576			4,053			124,888
Selling and administrative expenses		34,275			12,236			13,177			2,806			62,494
Income from operations		40,026			16,722			4,399			1,247			62,394
Interest (expense) income allocation		(2,826	)		(1,147	)		(1,179	)		316			(4,836	)
Income before provision for income taxes		37,200			15,256			3,220			1,563			57,239
Rental equipment acquisitions		33,650			22,661			1,410		—				57,721
Accounts receivable, net (period end)		82,110			22,211			13,976			7,643			125,940
Rental equipment, at cost (period end)		892,339			337,987			316,497		—				1,546,823
Rental equipment, net book value (period end)		624,971			166,996			177,714		—				969,681
Utilization (period end) 2		76.8	%		65.7	%		43.1	%
Average utilization 2		78.2	%		64.7	%		45.9	%
2019
Rental revenues	$	86,998		$	49,112		$	34,691		$	—		$	170,801
Rental related services revenues		30,372			1,562			13,988		—				45,922
Sales and other revenues		15,444			12,312			1,091			3,877			32,724
Total revenues		132,814			62,986			49,770			3,877			249,447
Depreciation of rental equipment		10,877			19,684			8,126		—				38,687
Gross profit		62,865			28,492			24,086			1,443			116,886
Selling and administrative expenses		31,047			12,063			14,894			2,506			60,510
Income (loss) from operations		31,818			16,429			9,192			(1,063	)		56,376
Interest (expense) income allocation		(3,761	)		(1,385	)		(1,646	)		546			(6,246	)
Income (loss) before provision for income taxes		28,057			15,130			7,546			(517	)		50,216
Rental equipment acquisitions		43,614			42,999			3,327		—				89,940
Accounts receivable, net (period end)		75,633			21,212			20,106			4,067			121,018
Rental equipment, at cost (period end)		854,076			307,639			315,571		—				1,477,286
Rental equipment, net book value (period end)		600,351			150,655			192,146		—				943,152
Utilization (period end) 2		79.6	%		67.3	%		55.3	%
Average utilization 2		79.1	%		65.7	%		57.1	%

1. Gross Enviroplex sales revenues were $11,979 and $3,877 for the six months ended June 30, 2020 and 2019, respectively. There were $1,277 inter-segment sales to Mobile Modular in the six months ended June 30, 2020, which required elimination in consolidation.  There were no inter-segment sales in the six months ended June 30, 2019.

2. 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 six months ended June 30, 2020 and 2019. Revenues from foreign country customers accounted for 2% and 4% of the Company’s total revenues for the same periods, respectively.