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Introduction & Market Context
McGrath RentCorp (NASDAQ:MGRC) reported strong second-quarter 2025 results on July 24, with total revenues increasing 11% year-over-year to $235.6 million, according to the company’s latest investor presentation. The modular building, electronic test equipment, and portable storage rental company also reported a 3% increase in Adjusted EBITDA to $83.5 million.
The company’s stock closed at $115.05 on the day of the presentation, up 0.79% from the previous close, reflecting investor confidence in McGrath’s steady performance amid varying segment results.
Quarterly Performance Highlights
McGrath’s Q2 2025 results showed solid performance across most business segments, with total revenues reaching $235.6 million, an 11% increase from Q2 2024. Adjusted EBITDA grew more modestly at 3% year-over-year to $83.5 million.
As shown in the following comprehensive financial table comparing the three and six months ended June 30, 2025 to the same periods in 2024, McGrath demonstrated growth across most key metrics:
The Mobile Modular segment, which represents the largest portion of McGrath’s business, delivered an 8% increase in total revenues to $156 million. This growth was driven by both rental and sales increases, with particular progress in strategic growth initiatives such as increased revenue per unit on rent and contributions from Mobile Modular Plus.
The rental revenue comparison across segments shows the varied performance, with Mobile Modular growing 5%, TRS-RenTelco up 7%, but Portable Storage declining 5% year-over-year:
Similarly, the Adjusted EBITDA comparison reveals modest growth across segments, though at a slower pace than revenue growth:
Detailed Financial Analysis
McGrath’s business mix, based on 2024 data, shows the company’s heavy reliance on its Mobile Modular segment, which accounted for 75% of total revenues and 67% of total Adjusted EBITDA. Portable Storage contributed 15% of revenues and 21% of Adjusted EBITDA, while TRS-RenTelco represented 10% of revenues and 12% of Adjusted EBITDA.
The Mobile Modular segment, McGrath’s largest business unit, saw its Q2 2025 total revenues of $156 million distributed across three categories, with rental operations accounting for the majority:
Mobile Modular’s pricing strategy appears to be yielding positive results, with a 6% increase in monthly revenue per unit on rent in Q2 2025 ($840) compared to Q2 2024 ($793). New shipments over the last twelve months also showed a 4% increase in monthly revenue per unit, rising from $1,124 in 2024 to $1,168 in 2025.
The company’s value-added services initiatives, including Mobile Modular Plus and Site Related Services, have shown impressive growth. These initiatives have achieved an approximate 28% CAGR from 2022 to 2025, with Mobile Modular Plus projected to reach $17.8 million in 2025 (up from $8.5 million in 2022) and Site Related Services expected to hit $10.6 million (up from $4.9 million in 2022).
Strategic Initiatives
McGrath has outlined several strategic priorities focused on growth, capital allocation, and shareholder value. The company’s unique attributes include a strong investor focus with a shareholder return CAGR of 16%, a diverse customer base of approximately 21,000 customers, and a 34-year track record of consecutive dividend increases.
For the Mobile Modular segment, McGrath identified several growth opportunities, including positive fleet pricing dynamics as contracts churn and additional services are provided to customers. The company is also focusing on Mobile Modular Plus (products and services to support rental customers’ use of buildings), Site Related Services (products and services outside the building), and Custom Modular Solutions (large turnkey projects).
The company’s customer mix for rental operations revenue in 2024 was 66% commercial and 34% education, providing diversification across various industries. Within the commercial segment, construction (both commercial and residential) represented the largest portion at 37% of total rental operations revenue.
Forward-Looking Statements
McGrath has slightly raised its 2025 financial outlook since its previous guidance issued on April 24, 2025. The company now projects total revenues of $925 million to $960 million (up from $920-$960 million) and Adjusted EBITDA of $347 million to $356 million (up from $345-$355 million). Gross rental equipment capital expenditures remain unchanged at $115 million to $125 million.
This modest upward revision suggests management’s growing confidence in the company’s performance for the remainder of 2025, despite the mixed segment performance. The improvement also represents a significant step up from Q1 2025, when the company reported revenues of $195.4 million and faced challenges meeting analyst expectations.
While Mobile Modular and TRS-RenTelco continue to show healthy growth, the ongoing weakness in the Portable Storage segment (down 5% in Q2 after a 13% decline in Q1) remains a challenge. However, the sequential improvement from Q1 to Q2 suggests the segment may be stabilizing.
McGrath’s consistent focus on shareholder returns, evidenced by 34 consecutive years of dividend increases, combined with its strategic growth initiatives and modest guidance increase, positions the company to continue delivering steady performance through the remainder of 2025, despite varying segment results and broader economic uncertainties.
Full presentation:
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