MCGRATH RENTCORP

McGrath RentCorp is a diversified business-to-business rental company operating in the relocatable modular buildings, portable storage containers, and electronic test equipment industries. The relocatable modular building rental industry has equipment on rent or available for rent in the U.S. with an aggregate original cost of over $5.0 billion. The electronic test equipment rental market has equipment on rent worldwide or available for rent with an aggregate original cost in excess of $1 billion. The annual world-wide sales of electronic test equipment is in excess of $8.0 billion per year. The portable storage container rental market in the U.S. has a large and diverse number of market segments including construction, retail, commercial and industrial, energy and petrochemical, manufacturing, education and healthcare.

Mobile Modular has a leading modular building fleet in the United States and is a leading supplier in California and Florida, and a significant supplier in Texas, of modular educational facilities for rental to both public and private schools. Portable Storage is one of the largest participants in the temporary portable storage rental industry in North America. TRS-RenTelco is one of the largest electronic test equipment rental and leasing companies offering a broad and deep selection of general purpose and communications test equipment for rent in North America. The modular building and portable storage leasing industries are highly competitive, with some competitors having a greater range of products and services, greater financial and marketing resources, larger customer bases, and greater name recognition. The electronic test equipment rental business is characterized by intense competition from several competitors, some of which may have access to greater financial and other resources.

The Company invests capital in rental products and generally recovers its original investment through rents less cash operating expenses in a relatively short period of time compared to the product's rental life. When rental products are sold, the proceeds generally recover a high percentage of the original investment. The Company generates revenues primarily from the rental of its equipment on operating leases with sales of equipment occurring in the normal course of business. Rental operations revenues comprised approximately 70% of the Company's total revenues from continuing operations in 2025 and 72% for the three years ended December 31, 2025. Sales and other revenues comprised approximately 30% of the Company's consolidated revenues from continuing operations in 2025 and 28% for the three years ended December 31, 2025. The Company's primary emphasis is on equipment rentals.

Mobile Modular rents and sells relocatable modular buildings designed for use as classrooms, temporary offices, construction field offices, and other purposes. Modulars have an estimated life of eighteen years compared to the typical rental term of twelve to twenty-four months. At December 31, 2025, Mobile Modular owned 41,722 ¹ new or previously rented modulars, with an aggregate cost of $1,485.8 million ² including accessories, or an average cost per unit of $35,612 ³. Fleet utilization was 70.7% ⁴ at December 31, 2025 and average fleet utilization during 2025 was 73.0% ⁵. The original investment for modulars is recovered in approximately four years. Mobile Modular's largest sale during 2025 represented approximately 3% of Mobile Modular's sales, 2% of the Company's consolidated sales and 1% of the Company's consolidated revenues. Enviroplex manufactures portable classrooms built to the requirements of the California Division of the State Architect and sells directly to California public school districts and other educational institutions.

Portable Storage's rental inventory is comprised of steel containers used for temporary storage solutions. Containers have an estimated life of twenty-five years compared to a typical rental term of three to twelve months. At December 31, 2025, Portable Storage owned 42,262 ⁶ containers with an aggregate cost of $245.1 million ⁷ or an average cost per unit of $5,801 ⁸. Utilization was 59.0% ⁹ at December 31, 2025 and averaged 60.8% ¹⁰ during the year. The original investment for containers is recovered in approximately three years. TRS-RenTelco rents and sells electronic test equipment nationally and internationally. Electronic test equipment has an estimated life range of one to eight years compared to a typical rental term of one to six months. At December 31, 2025, TRS-RenTelco had an electronic test equipment rental inventory including accessories with an aggregate cost of $337.1 million ¹¹. Utilization was 63.2% ¹² as of December 31, 2025 and averaged 63.8% ¹³ during the year. The original investment for electronic test equipment is recovered in approximately three years. For 2025, gross profit on equipment sales was approximately 26% ¹⁴ of total division gross profit for TRS-RenTelco. In 2025, approximately 22% ¹⁵ of the electronic test equipment revenues were derived from sales. The largest electronic test equipment sale during 2025 represented 3% of electronic test equipment sales, less than 1% of the Company's consolidated sales and less than 1% of consolidated revenues.

On January 28, 2024, the Company entered into an Agreement and Plan of Merger with WillScot Mobile Mini Holdings Corp. On September 17, 2024, the Company and WillScot Mobile Mini mutually agreed to terminate the Merger Agreement, effective upon WillScot Mobile Mini's cash payment of $180.0 million ¹⁶ to the Company, which was received on September 20, 2024. Expenses recognized as a result of the terminated Merger Agreement during the year ended December 31, 2024, were $63.2 million ¹⁷. The termination payment received of $180.0 million ¹⁸, net of transaction costs, resulted in net proceeds received of $116.8 million ¹⁹ during the year ended December 31, 2024. In September 2024, the Company's Board of Directors increased the capacity under the share repurchase program by authorizing the Company to repurchase up to 2,000,000 ²⁰ shares of the Company's outstanding common stock. As of December 31, 2025, 2,000,000 ²¹ shares were authorized for repurchase under the Repurchase Plan. There were no shares repurchased during the three and twelve months ended December 31, 2025 and 2024. In February 2026, the Company announced that its Board of Directors declared a cash dividend of $0.495 ²² per common share for the quarter ending March 31, 2026, an increase of 2% ²³ over the prior year's comparable quarter.

Consolidated revenues in 2025 increased 4% ²⁴ to $944.2 million ²⁵, from $910.9 million ²⁶ in 2024. Consolidated net income in 2025 decreased to $156.3 million ²⁷, or $6.35 ²⁸ per diluted share in 2025, compared to $231.7 million ²⁹, or $9.43 ³⁰ per diluted share, in 2024. Excluding the gain and transaction costs attributed to the merger termination in the prior year, the Company's net income increased by approximately $10.9 million ³¹, or 7% ³², to $156.3 million ³³, and diluted earnings per share increased $0.43 ³⁴, or 7% ³⁵, to $6.35 ³⁶, compared to $5.92 ³⁷ in 2024. Gross profit increased $19.6 million ³⁸, or 4% ³⁹, to $455.0 million ⁴⁰. Selling and administrative expenses increased $10.9 million ⁴¹, or 5% ⁴², to $211.4 million ⁴³. Interest expense decreased $16.6 million ⁴⁴, due to 23% ⁴⁵ lower average debt levels, accompanied by 15% ⁴⁶ lower net average interest rates of 5.48% ⁴⁷ in 2025 compared to 6.48% ⁴⁸ in 2024. Adjusted EBITDA increased $10.7 million ⁴⁹, or 3% ⁵⁰, to $362.5 million ⁵¹ in 2025.

The Company's largest business segment for Mobile Modular is for temporary classroom and other educational space needs of public and private schools, colleges and universities in California, Florida, Georgia, Louisiana, Maryland, North Carolina, South Carolina, Texas, Virginia and Washington, D.C. Management believes the demand for rental classrooms is driven by shifting and fluctuating school populations, the limited state funds for new construction, the need for temporary classroom space during reconstruction of older schools, class size reduction and the phasing out of portable classrooms compliant with older building codes. The Company has expanded its modular and portable storage operations into new geographies and states in the past. Mobile Modular operates primarily in California, Colorado, Florida, Georgia, Louisiana, Maryland, the Midwest, North Carolina, the Pacific Northwest, South Carolina, Texas, Virginia and Washington, D.C. Portable Storage has a national reach from branches serving the West, Pacific Northwest, Northeast, Mid-Atlantic, Southeast and Midwest.

TRS-RenTelco markets its electronic test equipment throughout the United States, Canada, and, to a limited extent, other countries. Total foreign country customers and operations account for less than 10% ⁵² of the Company's revenues. The Company continues to consider expansion opportunities domestically and internationally for its rental businesses. The Company anticipates that it will continue to consider acquisitions in the future that meet its strategic growth plans.

The Company believes that sharing of common facilities, financing, senior management, and operating and accounting systems by all of the Company's operations, results in an efficient use of overhead. Historically, the Company's operating margins have been impacted favorably to the extent its costs and expenses are leveraged over a large installed customer base. The Company believes its business model and results are enhanced by operational leverage that is created from large regional sales and inventory centers for modulars, a single U.S. based sales, inventory and operations facility for electronic test equipment, as well as shared senior management and back-office functions.

As of December 31, 2025, the Company had 1,306 ⁵³ employees, of whom 148 ⁵⁴ were primarily administrative and executive personnel, with 725 ⁵⁵, 206 ⁵⁶, 131 ⁵⁷ and 96 ⁵⁸ in the operations of Mobile Modular, Portable Storage, TRS-RenTelco and Enviroplex, respectively. None of our employees are covered by a collective bargaining agreement. The Company provides training in technical, operational and leadership skills, and places special emphasis on safety, effective communications, customer service, and employee development. The Company also offers employees a tuition reimbursement program.

The Company's annual debt service obligations increase by approximately $2.7 million ⁵⁹ per year for each 1% ⁶⁰ increase in the average interest rate based on the $265.0 million ⁶¹ balance of variable rate debt outstanding at December 31, 2025. The Company does not have any derivative financial instruments such as interest rate swaps or hedges to mitigate interest rate variability. The Company believes that it will continue to be able to negotiate general bank lines of credit and issue senior notes adequate to meet capital requirements not otherwise met by operational cash flows and proceeds from sales of rental equipment.

Funding for public school facilities is derived from a variety of sources including the passage of both statewide and local facility bond measures, operating budgets, developer fees, various taxes including parcel and sales taxes levied to support school operating budgets, and lottery funds. There is no certainty on the timing of the bond sales and it could take additional years before projects funded by these bonds generate meaningful demand for relocatable classrooms. The state of California is the Company's largest market for classroom rentals. The strength of this market depends heavily on public funding from voter passage of both state and local facility bond measures, and the ability of the state to sell such bonds in the public market. A lack of passage of state and local facility bond measures, or the inability to sell bonds in the public markets in the future could reduce the Company's revenues and operating income.

Adverse macroeconomic conditions in the United States and globally, including inflation, cost increases from tariffs, slower than expected growth or recession, changes to fiscal and monetary policy, tightening of the credit markets, higher interest rates and currency fluctuations, could negatively impact the Company's business, financial condition, results of operations and liquidity. The Company receives revenues in Canadian dollars from its business activities in Canada, subjecting it to fluctuations in currency exchange rates. The Company currently does not engage in hedging strategies to mitigate this risk.

Significant reductions of, or delays in, funding to public schools have caused the demand and pricing for modular classroom units to decline, which has in the past caused, and may cause in the future, a reduction in revenues and profitability. Rentals and sales of modular buildings to public school districts for K-12 represent a significant portion of Mobile Modular's rental and sales revenues, comprising 25% ⁶² of the Company's consolidated rental and sales revenues from continuing operations for 2025. The state of California is the Company's largest market for classroom rentals, and the strength of this market depends heavily on public funding from voter passage of bond measures. The majority of the Company's indebtedness is subject to variable interest rates, making it vulnerable to increases in interest rates. The annual debt service obligations increase by approximately $2.7 million ⁶³ per year for each 1% ⁶⁴ increase in the average interest rate based on the $265.0 million ⁶⁵ balance of variable rate debt outstanding at December 31, 2025. The electronic test equipment rental business is characterized by intense competition and changing technology that may render existing equipment obsolete, and TRS-RenTelco's revenues are derived from cyclical industries including aerospace, defense, communications, manufacturing and semiconductor industries. The Company's rental equipment is subject to residual value risk upon disposition, and the market value of used equipment depends on several factors including technological advances and general economic conditions.

Management's message emphasizes that the Company is a leading rental provider of relocatable modular buildings for classroom and office space, portable storage containers, and electronic test equipment. The Company's primary emphasis is on equipment rentals. Management believes that rental revenue growth from an increasing base of rental assets and improved gross profit on rents are the best measures of the health of each of the Company's rental businesses. The Company believes its business model and results are enhanced by operational leverage. Management's goal for Mobile Modular is to be more responsive at less expense. The Company anticipates intense competition to continue and believes it must continue to improve its products and services to remain competitive. The Company believes that its employees are key to its success and it is committed to all of its employees' engagement, training and career development. The Company's strategic priorities include creating facilities and infrastructure capabilities that allow it to drive greater efficiency, maintaining a high quality and well-maintained fleet, and providing excellent customer service.