McGrath RentCorp Reports Third Quarter 2025 Results
McGrath RentCorp (“McGrath” or the “Company”) (Nasdaq: MGRC), a leading North American business-to-business rental company, today released its financial results for the third quarter ended September 30, 2025. The Company reported total revenues of $256.4 million for the quarter, reflecting a 4% decline compared to $266.8 million in the same quarter of 2024. Net income for the third quarter of 2025 was $42.3 million, or $1.72 per diluted share, compared to $149.3 million, or $6.08 per diluted share, in the third quarter of 2024.
The notable decrease in net income compared to the prior year was largely influenced by the $180.0 million merger termination payment received from WillScot Mobile Mini in Q3 2024, partially offset by $39.4 million in transaction costs, net of provision for income taxes. Excluding these items, McGrath’s net income decreased by $3.6 million, or 8%, and diluted earnings per share declined by $0.15, representing an 8% decrease year over year.
Third Quarter 2025 Year-Over-Year Highlights
Despite some headwinds in market demand, McGrath delivered solid performance across its core rental segments:
- Rental operations revenues grew 4% to $178.1 million.
- Sales revenues decreased 18% to $76.1 million.
- Total revenues declined 4% to $256.4 million.
- Income from operations fell 11% to $66.7 million.
- Adjusted EBITDA decreased 7% to $96.5 million.
- The Company maintained a quarterly dividend of $0.485 per share, which represents a 1.6% annualized yield based on the October 22, 2025 closing price of $122.20 per share.
Joe Hanna, President and CEO of McGrath, provided insights on the Company’s quarterly results:
We delivered solid third-quarter results, with rental revenue growth across all operating segments, despite some challenging market demand conditions. While sales revenues were lower than a year ago, our year-to-date performance shows cumulative growth, reflecting a more balanced contribution across quarters compared to 2024.
Modular rental revenues increased 2% year over year, primarily driven by commercial customer demand. In line with current utilization levels, we reduced rental equipment capital spending and focused on preparing our fleet to meet new shipments, which contributed to higher operating expenses for the quarter.
Portable Storage rental revenues grew 1%, marking its first year-over-year growth since the first quarter of 2024. We are encouraged that market conditions for this segment are stabilizing, despite softness in commercial construction project activity.
TRS-RenTelco experienced strong performance, with rental revenues up 9% over last year. As seen in Q2, market demand improvements were broad-based across customer segments.Overall, we are pleased with our year-to-date progress. We have delivered business growth while strategically lowering capital expenditures, expanded contributions from modular services offerings, and broadened geographic sales coverage. Entering Q4, we are well-positioned to maintain momentum and deliver a strong finish to the year.
Division Performance Highlights
McGrath’s results reflect the performance of three core divisions: Mobile Modular, Portable Storage, and TRS-RenTelco. Each division experienced unique market dynamics during the quarter.
Mobile Modular
The Mobile Modular division reported an Adjusted EBITDA of $64.6 million for Q3 2025, down 10% compared to the same quarter in 2024.
- Rental revenues increased 2% to $83.2 million.
- Depreciation expenses rose 7% to $10.8 million.
- Other direct costs climbed 18% to $24.2 million, driven primarily by higher labor and material costs required to prepare equipment to meet customer demand.
These factors contributed to a 5% decline in gross profit on rental revenues, which totaled $48.2 million.
Rental-related services revenues grew 5% to $44.5 million, primarily due to increased site-related services. However, gross profit on rental-related services decreased 2% to $14.7 million.
Sales revenues for the division fell 21% to $52.3 million, reflecting lower new equipment sales. Despite the decline, gross margin on sales improved to 36% from 34% in the prior-year period, resulting in a 16% decrease in gross profit on sales revenues to $18.8 million. The increase in gross margin was driven by a higher proportion of used equipment sales versus new equipment.
Selling and administrative expenses increased $1.4 million to $35.4 million, mainly due to $1.2 million in higher allocated corporate expenses compared to Q3 2024.
Portable Storage
The Portable Storage division reported Adjusted EBITDA of $9.2 million, down 14% compared to Q3 2024.
- Rental revenues increased 1% to $17.3 million.
- Depreciation expenses rose 5% to $1.1 million.
- Other direct costs surged 65% to $2.2 million, resulting in a 4% decline in gross profit on rental revenues to $14.0 million.
Rental-related services revenues decreased 5% to $4.2 million, and the division recorded a gross loss of $0.6 million on these services, compared with a gross profit of $0.1 million in Q3 2024.
Sales revenues increased by $1.3 million to $2.7 million, driven primarily by higher used equipment sales. The division also benefited from an improved gross margin on sales, which rose to 40% from 36% year over year, resulting in a $0.6 million increase in gross profit to $1.1 million.
Selling and administrative expenses increased $1.1 million to $7.9 million, primarily due to a $0.5 million rise in employee salaries and benefits, along with $0.3 million higher allocated corporate expenses.
TRS-RenTelco
TRS-RenTelco achieved Adjusted EBITDA of $20.2 million, representing a 7% increase compared to the same period in 2024.
- Rental revenues increased 9% to $28.0 million.
- Depreciation expenses decreased 8%, while other direct costs rose 10%, driving a 28% increase in gross profit on rental revenues to $12.1 million. The growth in rental revenues was primarily due to strengthened end markets and higher average rental equipment on rent.
Sales revenues decreased 3% to $7.3 million. However, gross margin on sales improved to 56% from 52% year over year, resulting in a 5% increase in gross profit to $4.1 million.
Selling and administrative expenses increased by $0.5 million to $7.1 million compared to Q3 2024.
Financial Overview and Strategic Insights
McGrath’s third-quarter performance highlights the company’s ability to deliver growth in rental operations, despite softer sales results compared to last year. The Mobile Modular division remains the largest contributor to revenues and EBITDA, supported by steady demand from commercial clients. Portable Storage shows early signs of recovery, and TRS-RenTelco continues to benefit from favorable market trends in its customer base.
Capital expenditure discipline was a key focus during Q3. McGrath strategically reduced rental equipment spending while prioritizing fleet readiness to satisfy new shipments. This approach has allowed the Company to manage operating expenses prudently while maintaining service levels and supporting rental growth.
The year-over-year comparison also underscores the impact of the Q3 2024 WillScot Mobile Mini merger termination payment, which materially inflated prior-year results. When excluding these one-time items, McGrath delivered stable underlying financial performance, with an 8% decline in net income and EPS, reflecting resilient rental operations and continued operational efficiency.
Dividend payments remain consistent, with the $0.485 quarterly rate providing shareholders with a stable return. Annualized, this dividend equates to a 1.6% yield based on the October 22, 2025 closing price. McGrath’s commitment to returning value to shareholders remains a core part of its capital allocation strategy.
