Segment Reporting

6 Months Ended

Jun. 30, 2022

Segment Reporting [Abstract]

Segment Reporting

NOTE 6. 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 2021 Annual Report. Management focuses on several key measures to evaluate and assess each segment’s performance, including rental revenue growth, gross profit and gross margins, income from operations, income before provision for income taxes and adjusted EBITDA. 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 amongst 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, 2022 and 2021 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,
2022
Rental revenues	$	126,487		$	58,230		$	30,148		$	—		$	214,865
Rental related services revenues		39,594			1,484			12,058		—				53,136
Sales and other revenues		35,941			11,118			1,777			5,567			54,403
Total revenues		202,022			70,832			43,983			5,567			322,404
Depreciation of rental equipment		15,582			24,362			7,994		—				47,938
Gross profit		92,820			30,826			19,335			1,345			144,326
Selling and administrative expenses		50,447			13,204			13,501			2,763			79,915
Income (loss) from operations		42,373			17,622			5,834			(1,418	)		64,411
Interest (expense) income allocation		(3,821	)		(1,232	)		(1,119	)		351			(5,821	)
Income (loss) before provision for income taxes		38,552			16,222			4,715			(1,067	)		58,422
Adjusted EBITDA		66,178			42,781			15,327			(1,276	)		123,010
Rental equipment acquisitions		51,575			42,791			1,610		—				95,976
Accounts receivable, net (period end)		118,865			24,796			17,248			6,420			167,329
Rental equipment, at cost (period end)		1,075,898			389,383			309,010		—				1,774,291
Rental equipment, net book value (period end)		776,003			177,038			144,484		—				1,097,525
Utilization (period end) 2		78.6	%		65.3	%		51.8	%
Average utilization 2		77.6	%		64.6	%		49.9	%
2021
Rental revenues	$	99,895		$	55,136		$	25,637		$	—		$	180,668
Rental related services revenues		30,258			1,450			10,649		—				42,357
Sales and other revenues		23,067			10,800			1,382			9,356			44,605
Total revenues		153,220			67,386			37,668			9,356			267,630
Depreciation of rental equipment		12,893			23,278			8,243		—				44,414
Gross profit		75,693			29,365			15,019			2,871			122,948
Selling and administrative expenses		41,839			12,371			12,520			2,668			69,398
Income from operations		33,854			16,994			2,499			203			53,550
Interest (expense) income allocation		(2,426	)		(920	)		(922	)		228			(4,040	)
Income before provision for income taxes		31,428			16,017			1,577			431			49,453
Adjusted EBITDA		53,473			41,411			12,436			329			107,649
Rental equipment acquisitions		148,252			42,421			74		—				190,747
Accounts receivable, net (period end)		96,976			22,678			13,545			7,710			140,909
Rental equipment, at cost (period end)		1,019,697			360,720			313,677		—				1,694,094
Rental equipment, net book value (period end)		739,916			172,035			161,104		—				1,073,055
Utilization (period end) 2		76.3	%		66.9	%		45.8	%
Average utilization 2		75.7	%		67.7	%		42.1	%

1. Gross Enviroplex sales revenues were $6,423 and $10,211 for the six months ended June 30, 2022 and 2021, respectively. There were $856 and $855 inter-segment sales to Mobile Modular in the six months ended June 30, 2022 and 2021, respectively, which required elimination in consolidation.  

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, 2022 and 2021. Revenues from foreign country customers accounted for 4% and 5% of the Company’s total revenues for the same periods, respectively.