MGRC earnings analysis
What we found in MGRC's 10-Q: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
McGrath RentCorp reported Q2 revenue of $221.1 million, down 6% year over year, and diluted EPS of $1.39, down 5%, as weaker Mobile Modular sales and an Enviroplex sales decline outweighed rental growth and a strong TRS-RenTelco quarter. Gross margin was 48.8% and operating margin was 23.3%; both improved sequentially versus Q1, but Q2 gross profit declined $2.8 million year over year and selling and administrative expense rose $2.9 million. Cash generation remained solid at $105.7 million for the first half, though $118.4 million of investing outflows reflect materially higher rental-equipment investment.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- Core rental revenue remained resilient
- Q2 rental operations revenue grew despite the consolidated decline: Mobile Modular rental operations rose $3.9 million to $118.0 million, while TRS-RenTelco rental operations increased $5.1 million to $33.1 million.
- TRS-RenTelco delivered strong growth
- TRS-RenTelco was the clear growth driver, with revenue up $6.1 million (17%) to $42.6 million, gross profit up $5.8 million (35%) to $22.2 million, and pre-tax income up $4.8 million (60%) to $12.8 million.
- Sequential profitability rebounded
- Sequential earnings and margins improved: Q2 revenue of $221.1 million was up from $199 million in Q1, diluted EPS of $1.39 rose from $1.10, and operating margin increased to 23.3% from 21.9%.
- Operating cash flow remained solid
- Operating cash flow was $105.7 million for the first six months of 2026, only $4.0 million below the prior-year period's $109.7 million, despite six-month net income declining $3.5 million to $60.7 million.
- Liquidity and covenant capacity are sound
- Liquidity headroom remains substantial: $399.9 million was outstanding under credit facilities at June 30, leaving $325.1 million of borrowing capacity; leverage was 1.65x versus the 2.75x covenant maximum.
- Capital returns continued
- The board raised the quarterly cash dividend 2% year over year to $0.495 per share, while the company repurchased 250,000 shares for $27.2 million during the first half.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- Revenue and EPS declined and missed estimates
- Q2 revenue fell $14.5 million (6%) year over year to $221.1 million and diluted EPS declined $0.07 (5%) to $1.39; both were below consensus estimates of $236.7 million and $1.46, respectively.
- Modular and classroom sales weakened
- Mobile Modular sales revenue declined $9.3 million (23%) to $31.2 million, while Enviroplex sales revenue was $15.3 million lower year over year; these declines drove lower consolidated sales activity.
- Portable Storage margins remain pressured
- Portable Storage profitability deteriorated despite $23.5 million of quarterly revenue: pre-tax income fell $2.2 million (34%) to $4.4 million, and rental-related-service margin was negative 18% because of higher trucking costs.
- Elevated capex raises funding needs
- Investment outpaced operating cash generation in the first half: operating cash flow was $105.7 million while net investing cash use was $118.4 million, including $73.8 million more rental-equipment purchases than the prior-year period.
- New Middle East conflict and logistics risk
- The only material risk-factor update cites the February 2026 Iran conflict and Strait of Hormuz closure. Management warns that petroleum-driven logistics costs, supply-chain disruption, inflation and energy-price volatility could adversely affect results; Portable Storage service margin was already negative 18% in Q2.
What they reported.
What the company itself reported, taken out of the document.
- Earnings per share
- $1.39
- Gross margin
- 48.8%
- Operating margin
- 23.3%
- Segment
- Mobile Modular revenue: $150.4 million (-4% YoY)
- Segment
- Portable Storage revenue: $23.5 million (+1% YoY)
- Segment
- TRS-RenTelco revenue: $42.6 million (+17% YoY)
- Segment
- Enviroplex sales revenue declined $15.3 million YoY
What they said about what is next.
The 10-Q does not provide explicit quantitative revenue or EPS guidance. MD&A cites volatile interest rates, inflation, tariffs/trade policies, geopolitical conditions and foreign-exchange fluctuations as factors that could delay customer projects and hinder planning.
The filing reads about the same as the one before it.
What came before.
- 10-Q · April 29, 2026
- McGrath RentCorp's Q1 2026 results indicate slight revenue growth but declining profitability, with revenue increasing 2% year-over-year to $198.5 million. However, net income diminished by 4% to $27.0 million and…
- 10-K · February 25, 2026
- McGrath RentCorp (MGRC) reports stable operating performance in 2025 with total revenues of $944.235 million and operating income of $243.623 million, while 2025 net income of $156.308 million and diluted EPS of $6.35…
- 10-Q · July 24, 2025
- McGrath RentCorp reported Q2 consolidated revenue of $235.6M (up 11% y/y) and diluted EPS of $1.46 (vs $0.84 y/y), driven by stronger rental and sales margins at Mobile Modular, TRS‑RenTelco and Enviroplex and lower…
- 10-K · February 19, 2025
- McGrath RentCorp reported a strong 2024 with total revenues of $910,942,000 and operating income of $244,264,000, driven by its relocatable modular, portable storage and electronic test equipment businesses. The company…
This is our reading of a public filing, not the filing. Read the original on SEC.gov · Educational only. Nothing here is investment advice.
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