Executive Summary

Q2 revenue grew 5% year over year to $212.6M, with rental revenue up 3% to $121.2M; adjusted EBITDA rose 9% to $83.7M, while diluted EPS from continuing operations fell to $0.84 largely due to $12.4M in merger-related transaction costs that reduced EPS by $0.36 .
Mobile Modular was the standout: rental revenue +10% YoY and segment Adjusted EBITDA +20% to $53.4M; Portable Storage and TRS-RenTelco saw softer demand tied to weaker commercial construction and test/measurement end markets, respectively .
Management reiterated no financial guidance during the pending WillScot Mobile Mini merger; shareholders approved the deal on July 11 and the company agreed not to close before Sept. 27 as the FTC and certain state AGs continue reviews .
Sequentially, total revenue increased versus Q1 ($212.6M vs $187.8M) and adjusted EBITDA rose ($83.7M vs $72.1M), but EPS declined (Q2 $0.84 vs Q1 $0.93) without the Q1 property sale gain; S&A included $12.4M of merger costs in Q2 .
S&P Global consensus estimates were unavailable via our feed at the time of analysis; as a result, we cannot quantify beats/misses vs Street for this quarter (S&P Global consensus unavailable).

What Went Well and What Went Wrong

What Went Well

Mobile Modular delivered double-digit rental revenue growth (+10% YoY) with 20% Adjusted EBITDA growth to $53.4M; monthly revenue per unit on rent increased 18% YoY to $793, with new shipments up 13% to $1,124, reflecting pricing optimization and value-added offerings (Mobile Modular Plus, Site Related Services) .
Consolidated adjusted EBITDA grew 9% YoY to $83.7M (39% margin vs 38% LY), supported by higher rental and sales revenues and strong modular rental margins; operating cash generation year-to-date improved meaningfully ($139M vs $72M prior year) .
Modular sales gross margin expanded to 38% (from 31% LY) on a higher mix of used vs. new sales; segment rental backlog and quoting activity remained healthy (backlog +24% YoY; quoting +14% YoY) supporting near-term demand .

What Went Wrong

EPS declined to $0.84 from $1.14 YoY driven by $12.4M of merger transaction costs and higher interest expense; S&A rose 31% YoY largely due to merger-related costs .
Portable Storage revenue declined amid weaker commercial construction activity; utilization fell to 66.1% (from 78.2% LY), and segment Adjusted EBITDA decreased 11% YoY to $11.0M despite pricing discipline .
TRS-RenTelco continued to face end-market weakness (semiconductor and 5G field activity), with rental revenue down 11% YoY, utilization at 56.5% (58.2% LY), and Adjusted EBITDA down 16% YoY to $18.0M; wired/data center work was a partial offset .

Financial Results

Consolidated Performance (YoY, Seq, and margins)

Metric	Q2 2023	Q1 2024	Q2 2024
Revenue ($M)	$203.0	$187.8	$212.6
Diluted EPS – Continuing Ops ($)	$1.14	$0.93	$0.84
Adjusted EBITDA ($M)	$77.0	$72.1	$83.7
Adjusted EBITDA Margin (%)	38%	37%	39%
Selling & Administrative ($M)	$47.0	$59.8	$61.4
Net Income – Continuing Ops ($M)	$28.0	$22.8	$20.6

Notes:

Q2 included $12.4M transaction costs tied to the pending WillScot Mobile Mini merger, reducing diluted EPS by $0.36 .

Actual vs Street Consensus (Q2 2024)

Metric	Actual Q2 2024	S&P Global Consensus	Surprise
Revenue	$212.6M	N/A	N/A
Diluted EPS – Continuing Ops	$0.84	N/A	N/A

Note: S&P Global consensus unavailable at time of analysis due to access limitations (S&P Global data unavailable).

Segment Breakdown (Q2 2024 vs Q2 2023)

Segment	Q2 2023 Total Revenue ($M)	Q2 2024 Total Revenue ($M)	Q2 2023 Adj. EBITDA ($M)	Q2 2024 Adj. EBITDA ($M)
Mobile Modular	$138.8	$144.5	$44.5	$53.4
Portable Storage	$25.4	$24.0	$12.3	$11.0
TRS-RenTelco	$37.8	$32.7	$21.5	$18.0
Enviroplex	$0.9	$11.4	$(1.4)	$1.2
Consolidated	$203.0	$212.6	$77.0	$83.7

Operating KPIs by Segment

KPI	Segment	Q2 2023	Q2 2024
Average Utilization (%)	Mobile Modular	79.3%	78.4%
	Portable Storage	78.2%	66.1%
	TRS-RenTelco	58.2%	56.5%
Avg Monthly Rental Rate (%)	Mobile Modular	2.66%	2.76%
	Portable Storage	3.85%	3.96%
	TRS-RenTelco	4.16%	4.07%
Avg Monthly Total Yield (%)	Mobile Modular	2.11%	2.16%
	Portable Storage	3.01%	2.62%
	TRS-RenTelco	2.40%	2.28%

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Financial guidance (Revenue, EPS, etc.)	FY 2024	None provided post-merger announcement	No guidance provided during pending WillScot Mobile Mini merger	Maintained (no guidance)
Dividend	Q2 2024	$0.465 in Q2 2023	$0.475 declared	Raised YoY

Management reiterated they will not provide a financial outlook while the merger is pending .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2: Q4 2023)	Previous Mentions (Q-1: Q1 2024)	Current Period (Q2 2024)	Trend
Modular demand & pricing	Strong; pricing momentum; Vesta integration; monthly revenue per unit up 15% YoY; rental revenues +37%	Modular rental +19%; focus on pricing optimization; strong sales project pipeline	Modular rental +10%; monthly revenue per unit +18% YoY; new shipment rate +13%; backlog +24% YoY; quoting +14% YoY	Improving/stable
Portable Storage market	Healthy in Q4; retail softer; utilization fell vs LY	Rental +8% YoY; pricing holding; S&A higher	Weaker demand tied to commercial construction; utilization 66.1%; pricing discipline maintained	Soft, near trough
TRS-RenTelco end markets (semi/5G)	Semi weakness; 5G steady but not accelerating	Semi-related rental −13%; sales +33%	Continued weakness in semi and 5G field activity; wired/data center activity a bright spot	Bouncing along bottom
Value-added services (MM Plus, SRS)	Strong progress; FY23 growth	Continued progress in Q1	Ongoing traction; MM Plus $7.5M and SRS $5.8M in Q2; supports pricing and revenue per unit	Positive
Regulatory/legal (merger)	Merger announced; no 2024 guidance	Merger pending	Shareholders approved; FTC and some state AGs reviewing; no close before Sept. 27	Ongoing review

Management Commentary

“We were pleased with our second quarter results. The 5% increase in companywide revenues was driven by higher rental operations and sales revenues... Our modular business was the highlight... Portable storage demand conditions were weaker... TRS-RenTelco experienced continued demand challenges.”
“During the second quarter, the company incurred $12.4 million in transaction costs attributed to the pending merger with WillScot Mobile Mini, negatively impacting earnings per diluted share by $0.36.”
“Second quarter monthly revenue per unit on rent increased 18% year-over-year to $793... For new shipments over the last 12 months, the average monthly revenue per unit increased 13% to $1,124.”
“On July 11, our shareholders voted to approve the merger... we are continuing to cooperate with the FTC... We will not be providing any financial guidance or future outlook.”

Q&A Highlights

Modular demand mix: Commercial up 14%, Education up 6% YoY; education demand seasonally strongest in Q3–Q4; strong quoting (+14% YoY) and 24% higher modular backlog .
Portable Storage: Pricing discipline intact despite weaker volumes; softness concentrated in smaller, rate-sensitive commercial projects; signs of troughing with construction backlog indicator ticking up and retail seasonality ahead .
TRS-RenTelco: Semi-related projects remain slow; 5G field activity secularly lower; wired/data center-related activity supportive; bookings in July trending modestly better, suggesting stabilization .
Regulatory timeline: Company agreed not to close merger before Sept. 27 as FTC and some state AGs review; timing of FTC decision unknown .

Estimates Context

S&P Global consensus estimates for revenue, EPS, and EBITDA were unavailable via our feed at the time of analysis; therefore, we cannot quantify beats/misses vs Street for Q2 2024 (S&P Global consensus unavailable).
Management quantified the non-operational drag on EPS from $12.4M merger transaction costs ($0.36 per share), which helps explain the headline EPS decline despite 9% adjusted EBITDA growth .

Key Takeaways for Investors

Core operations solid: Adjusted EBITDA +9% YoY and margin to 39% despite merger expenses; Mobile Modular strength offsets softness elsewhere .
EPS quality caveat: Reported EPS was depressed by $12.4M in merger costs ($0.36/share); underlying profitability trends are better than GAAP EPS suggests .
Modular pricing and mix tailwinds: Higher revenue per unit and traction in Mobile Modular Plus/Site Related Services support revenue quality and margin durability through fleet churn .
Watch end-market inflections: Portable Storage may be near a trough if construction activity stabilizes and retail seasonality improves in H2; TRS bookings showing early signs of stabilization, with wired/data center as a relative bright spot .
Regulatory milestone risk: FTC/state AG review continues; parties will not close before Sept. 27, adding timeline uncertainty that can influence near-term stock volatility .
Balance sheet/cash flow supports investment: YTD operating cash flow rose to $139M, enabling continued fleet investment and dividends while maintaining funded debt/TTM adjusted EBITDA at ~2.43x .
No guidance: With no financial outlook during the merger process, quarterly execution, segment mix, and qualitative indicators (backlog, quoting, utilization trends) will be key data points for the market .

Appendix: Additional Data Points

Consolidated revenue mix in Q2: Rental operations $155.5M; Sales $54.4M; Other $2.7M .
Q2 S&A: $61.4M (includes ~$12.4M transaction costs) .
Year-to-date operating cash flow: $138.6M; rental equipment purchases $145.3M; dividends paid $23.4M .
Leverage and liquidity: Net borrowings $794M at quarter end; funded debt/TTM adjusted EBITDA 2.43x .

MCGRATH RENTCORP (MGRC)·Q2 2024 Earnings Summary