McGrath RentCorp (NASDAQ:MGRC) executives highlighted fourth-quarter revenue growth, a double-digit increase in adjusted EBITDA, and a 2026 outlook that assumes continued softness in non-residential construction while leaning on modular growth initiatives and momentum at TRS-RenTelco.
Leadership transition and dividend update
Chief Executive Officer Joe Hanna said the fourth quarter 2025 earnings call would be his final call as CEO, ahead of his retirement effective April 3. Hanna said he will remain a director on the company’s board. The company previously announced that Chief Operating Officer Phil Hawkins will succeed him.
Fourth-quarter performance: revenue up 5%, adjusted EBITDA up 14%
Management said fourth-quarter 2025 total revenue rose 5% year-over-year, driven by growth in rental operations revenue across each of the company’s three rental businesses. Chief Financial Officer Keith Pratt said total revenue increased to $257 million, with rental operations up 6% and sales revenue up 5%.
Adjusted EBITDA increased 14% to $105 million, which executives attributed to strong performance at Mobile Modular and TRS-RenTelco. Pratt added that selling and administrative expense rose $2.7 million to $54.4 million, while interest expense fell $2.4 million to $6.5 million due to lower average rates and lower average debt levels. The effective tax rate in the quarter was 26.4% versus 25% a year earlier.
Business segment highlights
- Mobile Modular: Pratt said adjusted EBITDA increased 13% to $68.7 million on total revenue of $175.8 million, up 2%. Rental revenue rose 2% and rental-related services revenue increased 10%, primarily from higher site-related services projects. Average fleet utilization was 71.3% versus 76% a year earlier, and returns of rental units exceeded new shipments in the quarter. Monthly revenue per unit on rent rose 6% to $874. Mobile Modular Plus revenue increased to $10.5 million from $8.4 million, while Site Related Services increased to $10.0 million from $6.9 million.
- Portable Storage: Pratt said adjusted EBITDA was $9.6 million, down 3% year-over-year, partly due to lower margins on delivery and pickup services in a highly competitive market. Rental revenue increased 3% to $17.3 million, helped by seasonal retail demand even as commercial construction remained soft. Average utilization was 61.2%, roughly flat with the prior year, which management said was consistent with signs of stabilization.
- TRS-RenTelco: Pratt said adjusted EBITDA rose 21% to $23.1 million. Total revenue increased 19% to $40.6 million, driven by rental and sales growth. Rental revenue rose 13% to $28.7 million, with average utilization increasing to 64.5% from 59.1%. Rental margins improved to 44% from 40% a year earlier. Management cited strength across general-purpose and communications fleets, including aerospace and defense, semiconductor-related activity, and data center demand. Executives also noted the business saw less of the typical year-end slowdown, with activity staying strong through December.
Cash flow, balance sheet, and capital allocation
For full-year 2025, Pratt said net cash provided by operating activities was $256 million, down from $374 million in the prior year. He attributed the decrease primarily to the absence of a non-recurring $180 million merger termination payment received in 2024, net of merger costs. Rental equipment purchases were $143 million in 2025 compared to $191 million a year earlier, and the company paid $48 million in shareholder dividends.
At quarter-end, Pratt said the company had net borrowings of $515 million, and funded debt to last-twelve-months adjusted EBITDA was 1.42x.
On M&A, executives said the company continues to maintain an active pipeline focused on targeted geographies, though timing depends on seller readiness and valuation. Management said it does not bake acquisitions into earnings guidance. Pratt also said the company completed two small deals in 2025 tied to geographic expansion—one in Portable Storage and one in modular.
2026 outlook: revenue of $945M to $995M and adjusted EBITDA of $360M to $378M
Pratt provided the company’s 2026 guidance, calling out a wide revenue range and noting that performance is often weighted toward the second half of the year. For the full year 2026, management expects:
- Total revenue: $945 million to $995 million
- Adjusted EBITDA: $360 million to $378 million
- Gross rental equipment capital expenditures: $180 million to $200 million
Additional company-level expectations include rental equipment depreciation expense of $85 million to $89 million, direct cost of rental operations of $122 million to $126 million, SG&A expense of $225 million to $229 million, and interest expense of approximately $26 million to $29 million.
Hawkins said non-residential construction indicators such as the Architectural Billings Index remain soft and that the company does not expect meaningful improvement in 2026, but believes it can continue to grow through initiatives including geographic expansion and service attachments. Executives said Mobile Modular began 2026 with lower utilization but expects adjusted EBITDA growth for the year, while Portable Storage is expected to be comparable to 2025 due to competitive pressures. Management said TRS is expected to grow again in 2026, with higher capital investment planned given recent utilization and demand outlook. For Enviroplex, after a strong 2025 with higher margins, management expects 2026 results to normalize closer to 2024 levels.
About McGrath RentCorp (NASDAQ:MGRC)
McGrath RentCorp, through its subsidiaries, provides rental, sales, and servicing of equipment for commercial, industrial, environmental, and residential markets. The company operates primarily through two segments—mobile storage and water management—offering flexible solutions for customers requiring on-site storage, water transport, treatment, and dewatering services.
In its mobile storage segment, McGrath RentCorp supplies portable storage containers and modular office units to sectors including construction, retail, government, and disaster restoration.
