MCGRATH RENTCORP

Previous wording

This Form 10-Q, including the following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), contains forward-looking statements under federal securities laws. Forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties. Our actual results could differ materially from those indicated by forward-looking statements as a result of various factors. These factors include, but are not limited to, those set forth under this Item, those discussed in Part II—Item 1a, “Risk Factors” and elsewhere in this Form 10-Q and those that may be identified from time to time in our reports and registration statements filed with the SEC.

Current wording

This Form 10-Q, including the following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), contains forward-looking statements under federal securities laws. Forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties. Our actual results could differ materially from those indicated by forward-looking statements as a result of various factors. These factors include, but are not limited to, those set forth under this Item, those discussed in Part II—Item 1a, “Risk Factors” and elsewhere in this Form 10-Q and those that may be identified from time to time in our reports and registration statements filed with the SEC. We undertake no duty to update any of these forward-looking statements after the date of filing of this Form 10-Q to conform such forward-looking statements to actual results or revised expectations, except as otherwise required by law.

Previous wording

This discussion should be read in conjunction with the Condensed Consolidated Financial Statements and related Notes included in Part I—Item 1 of this Form 10-Q and the Consolidated Financial Statements and related Notes and the Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC on February 25, 2026 (the “2025 Annual Report”). In preparing the following MD&A, we presume that readers have access to and have read the MD&A in our 2025 Annual Report, pursuant to Instruction 2 to paragraph (b) of Item 303 of Regulation S-K. We undertake no duty to update any of these forward-looking statements after the date of filing of this Form 10-Q to conform such forward-looking statements to actual results or revised expectations, except as otherwise required by law.

Current wording

This discussion should be read in conjunction with the Condensed Consolidated Financial Statements and related Notes included in Part I—Item 1 of this Form 10-Q and the Consolidated Financial Statements and related Notes and the Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC on February 25, 2026 (the “2025 Annual Report”). In preparing the following MD&A, we presume that readers have access to and have read the MD&A in our 2025 Annual Report, pursuant to Instruction 2 to paragraph (b) of Item 303 of Regulation S-K.

Previous wording

In the six months ended June 30, 2026, Mobile Modular, Portable Storage, TRS-RenTelco and Enviroplex contributed 63%, 10%, 27% and less than 1% of the Company’s income before provision for taxes (the equivalent of “pretax income”), respectively, compared to 63%, 14%, 16% and 7% for the same period in 2025.

Current wording

In the nine months ended September 30, 2026, Mobile Modular, Portable Storage, TRS-RenTelco and Enviroplex contributed 60%, 9%, 23% and 8% of the Company’s income before provision for taxes (the equivalent of “pretax income”), respectively, compared to 66%, 12%, 16% and 6% for the same period in 2025.

Previous wording

The Company’s rental operations include rental and rental related service revenues which comprised approximately 80% and 74% of consolidated revenues in the six months ended June 30, 2026 and 2025, respectively. Of the total rental operations revenues for the six months ended June 30, 2026, Mobile Modular, Portable Storage and TRS-RenTelco comprised 69%, 12% and 19%, respectively, compared to 70%, 13% and 17%, respectively, in the same period of 2025. The Company’s direct costs of rental operations include depreciation of rental equipment, rental related service costs, impairment of rental equipment (if applicable), and other direct costs of rental operations (which include direct labor, supplies, repairs, insurance, property taxes, license fees, cost of sub-rentals and amortization of certain lease costs).

Current wording

The Company’s rental operations include rental and rental related service revenues which comprised approximately 76% and 72% of consolidated revenues in the nine months ended September 30, 2026 and 2025, respectively. Of the total rental operations revenues for the nine months ended September 30, 2026, Mobile Modular, Portable Storage and TRS-RenTelco comprised 69%, 12% and 19%, respectively, compared to 71%, 12% and 17%, respectively, in the same period of 2025. The Company’s direct costs of rental operations include depreciation of rental equipment, rental related service costs, impairment of rental equipment (if applicable), and other direct costs of rental operations (which include direct labor, supplies, repairs, insurance, property taxes, license fees, cost of sub-rentals and amortization of certain lease costs).

Previous wording

The Company’s Mobile Modular, Portable Storage and TRS-RenTelco business segments sell modular units, storage containers and electronic test equipment, respectively, which are either new or previously rented. In addition, Enviroplex sells new modular buildings used primarily as classrooms in California. For the six months ended June 30, 2026 and 2025, sales and other revenues of modular, container and electronic test equipment comprised approximately 20% and 26% of the Company’s consolidated revenues, respectively. Of the total sales and other revenues from operations for the six months ended June 30, 2026 and 2025, Mobile Modular and Enviroplex together comprised 74% and 82%, respectively, Portable Storage comprised 5% and 3%, respectively, and TRS-RenTelco comprised 21% and 15%, respectively. The Company’s cost of sales includes the carrying value of the equipment sold and the direct costs associated with the equipment sold, such as delivery, installation, modifications and related site work.

Current wording

The Company’s Mobile Modular, Portable Storage and TRS-RenTelco business segments sell modular units, storage containers and electronic test equipment, respectively, which are either new or previously rented. In addition, Enviroplex sells new modular buildings used primarily as classrooms in California. For the nine months ended September 30, 2026 and 2025, sales and other revenues of modular, container and electronic test equipment comprised approximately 24% and 28% of the Company’s consolidated revenues, respectively. Of the total sales and other revenues from operations for the nine months ended September 30, 2026 and 2025, Mobile Modular and Enviroplex together comprised 80% and 84%, respectively, Portable Storage comprised 4% and 3%, respectively, and TRS-RenTelco comprised 16% and 13%, respectively. The Company’s cost of sales includes the carrying value of the equipment sold and the direct costs associated with the equipment sold, such as delivery, installation, modifications and related site work.

Previous wording

Consolidated revenues for the three months ended June 30, 2026, decreased 6% to $221.1 million from $235.6 million for the same period in 2025. Consolidated net income for the three months ended June 30, 2026, decreased 6% to $33.7 million from $36.0 million for the same period in 2025. Earnings per diluted share for the three months ended June 30, 2026, decreased 5% to $1.39, from $1.46 for the same period in 2025. The decrease in consolidated net income and earnings per diluted share during the period was primarily attributed to lower gross profit at Enviroplex, Mobile Modular and Portable Storage, partly offset by higher gross profit at TRS-RenTelco, a $1.8 million gain on sale of a corporate property, and lower interest expense incurred on outstanding debt obligations.

Current wording

Consolidated revenues for the three months ended September 30, 2026, increased 7% to $274.6 million from $256.4 million for the same period in 2025. Consolidated net income for the three months ended September 30, 2026, increased 15% to $48.8 million from $42.3 million for the same period in 2025. Earnings per diluted share for the three months ended September 30, 2026, increased 16% to $2.00, from $1.72 for the same period in 2025. The increase in consolidated net income and earnings per diluted share during the period was primarily attributed to higher gross profit at Enviroplex and TRS-RenTelco when compared to the same period in 2025.

Previous wording

Gross profit decreased $2.8 million to $107.9 million in 2026. Mobile Modular’s gross profit decreased $2.8 million, or 4%, primarily due to lower gross profit on sales and rental revenues, partly offset by an increase in gross profit on rental related services revenues. Portable Storage's gross profit decreased $1.4 million, or 9%, primarily due to lower gross profit on rental operations revenues. TRS-RenTelco’s gross profit increased $5.8 million, or 35%, primarily due to higher gross profit on rental and sales revenues. Enviroplex’s gross profit decreased $4.5 million, due to lower sales revenues in 2026.

Current wording

Gross profit increased $11.6 million to $130.9 million in 2026. Mobile Modular’s gross profit decreased $0.2 million to $82.9 million, primarily due to lower gross profit on sales and other revenues, partly offset by higher gross profit on rental operations revenues. Portable Storage's gross profit decreased $1.4 million, or 9%, primarily due to lower gross profit on rental operations revenues. TRS-RenTelco’s gross profit increased $5.0 million, or 30%, primarily due to higher gross profit on rental and sales revenues. Enviroplex’s gross profit increased $8.2 million to $12.7 million due to higher sales revenues and higher gross margin in 2026.

Previous wording

Selling and administrative expenses increased $5.5 million to $110.0 million, primarily due to $2.7 million higher marketing and administrative expenses and $2.6 million higher employees' salaries and benefit costs.

Current wording

Selling and administrative expenses increased $4.4 million, or 8%, to $56.9 million, primarily attributed to $2.7 million higher marketing and administrative expenses and $1.8 million higher employees' salaries and benefit costs.

Previous wording

Interest expense decreased $0.7 million, or 9%, to $7.1 million, which was primarily attributed to a lower effective interest rate in 2026 of 4.95%, compared to 5.56% for the same period in 2025, partly offset by $14.0 million higher average debt levels of the Company.

Current wording

Interest expense decreased $0.2 million, or 3%, to $8.0 million, which was primarily attributed to a lower effective interest rate in 2026 of 5.31%, compared to 5.81% for the same period in 2025, partly offset by $36.9 million higher average debt levels of the Company.

Previous wording

Pre-tax income contribution by Mobile Modular, Portable Storage and TRS-RenTelco was 63%, 10% and 27%, respectively, compared to 63%, 14% and 16%, respectively, for the comparable 2025 period. These results are discussed on a segment basis below. Enviroplex pre-tax income contribution was less than 1% in 2026, compared to 7% in 2025. The lower pre-tax income contribution from Enviroplex was primarily due to $19.0 million lower sales revenues in 2026.

Current wording

Pre-tax income contribution by Mobile Modular, Portable Storage and TRS-RenTelco was 57%, 6% and 19%, respectively, compared to 70%, 10% and 15%, respectively, for the comparable 2025 period. These results are discussed on a segment basis below. Enviroplex pre-tax income contribution was 18% in 2026, compared to 5% in 2025. The higher pre-tax income contribution from Enviroplex was primarily due to $12.0 million higher sales revenues and increased gross margin in 2026.

Previous wording

The provision for income taxes resulted in an effective tax rate of 27.0% and 27.3%, for the quarters ended June 30, 2026 and 2025, respectively.

Current wording

The provision for income taxes resulted in an effective tax rate of 26.0% and 27.7%, for the quarters ended September 30, 2026 and 2025, respectively.

Previous wording

For the three months ended June 30, 2026, Mobile Modular’s total revenues decreased $5.6 million, or 4%, to $150.4 million compared to the same period in 2025, primarily due to lower sales revenues, partly offset by higher rental operations revenues. Higher gross profit on rental related services revenues and lower allocated interest expense, offset by lower gross profit on sales, rental, and other revenues, and higher selling and administrative expenses, resulted in a $3.0 million decrease in pre-tax income to $27.0 million for the three months ended June 30, 2026, from $30.0 million for the same period in 2025.

Current wording

For the three months ended September 30, 2026, Mobile Modular’s total revenues decreased $1.5 million, or 1%, to $179.9 million compared to the same period in 2025, primarily due to lower sales revenues, partly offset by higher rental operations revenues. Higher gross profit on rental operations revenues, offset by lower gross profit on sales and other revenues, and higher selling and administrative expenses, resulted in a $3.3 million decrease in pre-tax income to $37.9 million for the three months ended September 30, 2026, from $41.1 million for the same period in 2025.

Previous wording

Gross Profit on Rental Revenues– Rental revenues increased $1.3 million, or 2%, due to 4% higher average rental equipment on rent, partly offset by 2% lower average monthly rental rates in 2026. As a percentage of rental revenues, depreciation was 14% and 13% in 2026 and 2025, respectively, and other direct costs were 31% in 2026 and 29% in 2025, which resulted in gross margin percentages of 55% in 2026, compared to 58% in 2025. The higher rental revenues and lower rental margins resulted in gross profit on rental revenues decreasing $1.8 million, or 4%, to $45.4 million in 2026.

Current wording

Gross Profit on Rental Revenues– Rental revenues increased $3.7 million, or 4%, due to 6% higher average rental equipment on rent, partly offset by 2% lower average monthly rental rates in 2026. As a percentage of rental revenues, depreciation was 14% and 13% in 2026 and 2025, respectively, and other direct costs were 30% in 2026 and 29% in 2025, which resulted in gross margin percentages of 56% in 2026, compared to 58% in 2025. The higher rental revenues and lower rental margins resulted in gross profit on rental revenues increasing $0.8 million, or 2%, to $49.0 million in 2026.

Previous wording

Gross Profit on Rental Related Services – Rental related services revenues increased $3.9 million, or 6%, compared to 2025. The increase in rental related services revenues was primarily attributable to higher delivery, return delivery and dismantle revenues. The increase in revenues and higher gross margin percentage of 36% in 2026, compared to 35% in 2025, resulted in rental related services gross profit increasing $2.2 million, or 10%, to $23.7 million in 2026.

Current wording

Gross Profit on Rental Related Services – Rental related services revenues increased $0.1 million compared to 2025. The increase in rental related services revenues was primarily attributable to higher delivery and dismantle revenues, partly offset by lower site related services revenues. The increase in rental related services revenues and higher gross margin percentage of 35% in 2026, compared to 33% in 2025, resulted in rental related services gross profit increasing $1.0 million, or 7%, to $15.7 million in 2026.

Previous wording

Gross Profit on Sales – Sales revenues decreased $9.3 million, or 23%, compared to 2025, primarily due to lower new equipment sales. The lower sales revenues and higher gross margin percentage of 36% in 2026, compared to 32% in 2025, resulted in gross profit on sales decreasing $1.8 million, or 14%, to $11.1 million. Sales occur routinely as a normal part of Mobile Modular’s rental business; however, these sales and related gross margins can fluctuate from quarter to quarter and year to year depending on customer requirements, the scope of work to be performed, equipment availability and funding.

Current wording

Gross Profit on Sales – Sales revenues decreased $5.3 million, or 10%, compared to 2025, primarily due to lower new equipment sales. The lower sales revenues and comparable gross margin percentage of 36% resulted in gross profit on sales decreasing $1.9 million, or 10%, to $16.8 million. Sales occur routinely as a normal part of Mobile Modular’s rental business; however, these sales and related gross margins can fluctuate from quarter to quarter and year to year depending on customer requirements, the scope of work to be performed, equipment availability and funding.

Previous wording

For the three months ended June 30, 2026, selling and administrative expenses increased $0.7 million, or 2%, to $37.4 million. The increase in selling and administrative expenses was primarily attributed to $1.1 million higher marketing and administrative expenses, partly offset by $0.3 million lower employees' salaries and benefit costs.

Current wording

For the three months ended September 30, 2026, selling and administrative expenses increased $2.9 million, or 8%, to $38.3 million. The increase in selling and administrative expenses was primarily attributed to a $1.5 million increase in employees' salaries and benefit costs and $1.2 million higher marketing and administrative expenses.

Previous wording

For the three months ended June 30, 2026, Portable Storage’s total revenues increased $0.2 million, or 1%, to $23.5 million compared to the same period in 2025, primarily due to higher rental related services and sales revenues, partly offset by lower rental and other revenues. Lower gross profit on rental operations revenues and higher selling and administrative expenses, partly offset by higher gross profit on sales revenues and lower allocated interest expense, resulted in a decrease in pre-tax income of $2.2 million, or 34%, to $4.4 million in 2026.

Current wording

For the three months ended September 30, 2026, Portable Storage’s total revenues decreased $0.7 million, or 3%, to $23.7 million compared to the same period in 2025, primarily due to lower rental and sales revenues, partly offset by higher rental related services revenues. Lower gross profit on rental operations and sales revenues, together with higher selling and administrative expenses, partly offset by lower allocated interest expense, resulted in a decrease in pre-tax income of $1.7 million, or 29%, to $4.2 million in 2026.

Previous wording

Portable Storage’s gross profit for the three months ended June 30, 2026, decreased $1.4 million, or 9%, to $13.7 million. For the three months ended June 30, 2026, compared to the same period in 2025:

Current wording

Portable Storage’s gross profit for the three months ended September 30, 2026, decreased $1.4 million, or 9%, to $13.4 million. For the three months ended September 30, 2026, compared to the same period in 2025:

Previous wording

Gross Profit on Rental Revenues – Rental revenues increased $0.1 million, due to comparable average monthly rental rates and average rental equipment on rent in 2026. As a percentage of rental revenues, depreciation was 7% and 6% in 2026 and 2025, respectively, and other direct costs were 13% and 10% in 2026 and 2025, respectively, which resulted in gross margin percentage of 80% and 83% in 2026 and 2025, respectively. The higher rental revenues and lower rental margins resulted in gross profit on rental revenues decreasing $0.9 million, or 3%, to $26.6 million in 2026.

Current wording

Gross Profit on Rental Revenues – Rental revenues decreased $0.5 million, or 3%, due to 1% lower average rental equipment on rent and 2% lower average monthly rental rates in 2026. As a percentage of rental revenues, depreciation was 7% and 6% in 2026 and 2025, respectively, and other direct costs were 13% in both periods, which resulted in gross margin percentage of 80% and 81% in 2026 and 2025, respectively. The lower rental revenues and lower rental margins resulted in gross profit on rental revenues decreasing $0.6 million, or 4%, to $13.4 million in 2026.

Previous wording

Gross Profit on Rental Related Services – Rental related services revenues increased 3% to $4.5 million in 2026. The gross margin on rental related services revenues was negative 18% in 2026, compared to 2% in 2025, primarily due to higher trucking related costs. The higher revenues coupled with lower gross margins in 2026 resulted in rental related services gross profit decreasing $0.9 million, when compared to 2025.

Current wording

Gross Profit on Rental Related Services – Rental related services revenues increased 5% to $4.4 million in 2026. The gross margin on rental related services revenues was negative 25% in 2026, compared to negative 13% in 2025, primarily due to higher trucking related costs. The higher revenues coupled with lower gross margins in 2026 resulted in rental related services gross profit decreasing $0.6 million, when compared to 2025.

Previous wording

Gross Profit on Sales– Sales revenues increased $0.5 million, primarily due to higher new and used equipment sales. The higher sales revenues and higher gross margins of 38% in 2026, compared to 36% in 2025, resulted in sales gross profit increasing $0.2 million, or 21%, to $1.3 million in 2026. Sales occur routinely as a normal part of Portable Storage’s rental business; however, these sales can fluctuate from period to period depending on customer requirements, equipment availability and funding.

Current wording

Gross Profit on Sales– Sales revenues decreased $0.4 million, or 16%, to $2.3 million in 2026. The lower sales revenues and lower gross margin of 37% in 2026, compared to 40% in 2025, resulted in a $0.2 million decrease in gross profit on sales revenues to $0.8 million in 2026. Sales occur routinely as a normal part of Portable Storage’s rental business; however, these sales can fluctuate from period to period depending on customer requirements, equipment availability and funding.

Previous wording

For the three months ended June 30, 2026, Portable Storage’s selling and administrative expenses increased $0.9 million, or 12%, to $8.5 million, primarily attributed to $0.5 million higher employees' salaries and benefit costs.

Current wording

For the three months ended September 30, 2026, Portable Storage’s selling and administrative expenses increased $0.4 million, or 5%, to $8.3 million, primarily attributed to $0.5 million higher marketing and administrative expenses, partly offset by $0.1 million lower employees' salaries and benefit costs.

Previous wording

For the three months ended June 30, 2026, TRS-RenTelco’s total revenues increased $6.1 million, or 17%, to $42.6 million, compared to the same period in 2025, primarily due to higher rental operations and sales revenues. The total revenue increase, together with higher gross profit on rental operations and sales revenues and lower interest expense, partly offset by an increase in selling and administrative expenses, resulted in an increase in pre-tax income of $4.8 million, or 60%, to $12.8 million for the three months ended June 30, 2026, when compared to 2025.

Current wording

For the three months ended September 30, 2026, TRS-RenTelco’s total revenues increased $8.4 million, or 23%, to $45.3 million, compared to the same period in 2025, primarily due to higher rental operations and sales revenues. The total revenue increase, together with higher gross profit on rental and sales revenues and lower interest expense, partly offset by lower gross profit on rental related services revenues and an increase in selling and administrative expenses, resulted in an increase in pre-tax income of $4.0 million, or 47%, to $12.5 million for the three months ended September 30, 2026, when compared to 2025.

Previous wording

Gross Profit on Rental Revenues – Rental revenues increased $4.7 million, or 17%, depreciation expense increased $0.8 million, or 8%, and other direct costs increased by $0.5 million, or 10%, resulting in a $3.4 million, or 29% increase in gross profit on rental revenues to $15.3 million. As a percentage of rental revenues, depreciation was 33% and 36% in 2026 and 2025, respectively, and other direct costs were 19% and 21% in 2026 and 2025, respectively, which resulted in a gross margin percentage of 48% in 2026 compared to 44% in 2025.

Current wording

Gross Profit on Rental Revenues – Rental revenues increased $7.4 million, or 26%, depreciation expense increased $1.5 million, or 15%, and other direct costs increased by $0.8 million, or 14%, resulting in a $5.0 million, or 42% increase in gross profit on rental revenues to $17.2 million. As a percentage of rental revenues, depreciation was 32% and 36% in 2026 and 2025, respectively, and other direct costs were 19% and 21% in 2026 and 2025, respectively, which resulted in a gross margin percentage of 49% in 2026 compared to 43% in 2025.

Previous wording

Gross Profit on Sales – Sales revenues increased $1.0 million, or 13%, to $8.7 million in 2026. Gross profit on sales increased $2.1 million, or 59%, to $5.8 million, with a higher gross margin percentage of 66% in 2026, compared to 47% in 2025. Sales occur as a normal part of TRS-RenTelco’s rental business; however, these sales and related gross margins can fluctuate from quarter to quarter depending on customer requirements and related mix of equipment sold, equipment availability and funding.

Current wording

Gross Profit on Sales – Sales revenues increased $0.5 million, or 7%, to $7.9 million in 2026. Gross profit on sales increased $0.3 million, or 8%, to $4.5 million, with a comparable gross margin percentage of 56% in 2026. Sales occur as a normal part of TRS-RenTelco’s rental business; however, these sales and related gross margins can fluctuate from quarter to quarter depending on customer requirements and related mix of equipment sold, equipment availability and funding.

Previous wording

For the three months ended June 30, 2026, selling and administrative expenses increased $0.9 million, or 13%, to $8.3 million, primarily attributed to $0.6 million higher allocated corporate expenses.

Current wording

For the three months ended September 30, 2026, selling and administrative expenses increased $1.1 million, or 15%, to $8.2 million, primarily attributed to $0.6 million higher allocated corporate expenses and $0.3 million higher marketing and administrative costs.

Previous wording

Consolidated revenues for the six months ended June 30, 2026, decreased 6% to $419.7 million, from $431.0 million for the same period in 2025. Consolidated net income for the six months ended June 30, 2026, decreased 5% to $60.7 million, from $64.2 million for the same period in 2025. Earnings per diluted share for the six months ended June 30, 2026, decreased $0.14 to $2.47, compared to $2.61 for the same period in 2025. The decrease in consolidated net income during the current period was primarily attributed to lower gross profit on sales revenues and $5.5 million higher selling and administrative expenses, partly offset by higher gross profit on rental operations revenues, a $2.3 million reduction in interest expense incurred on outstanding debt obligations and a $1.8 million gain on sale of a corporate property.

Current wording

Consolidated revenues for the nine months ended September 30, 2026, increased 1% to $694.3 million, from $687.5 million for the same period in 2025. Consolidated net income for the nine months ended September 30, 2026, increased 3% to $109.5 million, from $106.5 million for the same period in 2025. Earnings per diluted share for the nine months ended September 30, 2026, increased $0.14 to $4.46, compared to $4.32 for the same period in 2025. The increase in consolidated net income during the current period was primarily attributed to higher gross profit on rental operations and sales revenues, $2.6 million lower interest expense and a $1.8 million gain on sale of a corporate property, partly offset by $9.9 million higher selling and administrative expenses.

Previous wording

For the six months ended June 30, 2026, on a consolidated basis:

Current wording

For the nine months ended September 30, 2026, on a consolidated basis:

Previous wording

Gross profit decreased $2.4 million, or 1%, to $204.8 million in 2026. Mobile Modular’s gross profit decreased $3.5 million, or 3%, largely due to lower gross profit on rental and sales revenues, partly offset by higher gross profit on rental related services revenues. Portable Storage's gross profit decreased $2.2 million, or 8%, primarily due to lower gross profit on rental operations revenues. TRS-RenTelco’s gross profit increased $9.2 million, or 29%, primarily due to higher gross profit on rental operations and sales revenues. Enviroplex’s gross profit decreased $5.8 million due to lower sales revenues and comparable sales margins in 2026.

Current wording

Gross profit increased $9.3 million, or 3%, to $335.7 million in 2026. Mobile Modular’s gross profit decreased $3.7 million, or 2%, largely due to lower gross profit on sales revenues, partly offset by higher gross profit on rental operations revenues. Portable Storage's gross profit decreased $3.6 million, or 8%, primarily due to lower gross profit on rental operations revenues. TRS-RenTelco’s gross profit increased $14.2 million, or 30%, primarily due to higher gross profit on rental and sales revenues. Enviroplex’s gross profit increased $2.4 million due to higher sales margins, partly offset by lower sales revenues in 2026.

Previous wording

Interest expense decreased $2.3 million to $13.6 million, which was primarily attributed to $16.9 million lower average debt levels of the Company and a lower effective interest rate in 2026 of 4.96%, compared to 5.63% for the same period in 2025.

Current wording

Interest expense decreased $2.6 million to $21.6 million, which was primarily attributed to a lower effective interest rate in 2026 of 5.08%, compared to 5.69% for the same period in 2025, partly offset by $1.1 million higher average debt levels of the Company.

Previous wording

Pre-tax income contribution by Mobile Modular, Portable Storage and TRS-RenTelco was 61%, 10% and 29%, respectively, compared to 61%, 13% and 16%, respectively, for the comparable 2025 period. These results are discussed on a segment basis below. Enviroplex pre-tax income contribution was less than 1% in 2026, compared to 10% in 2025. The lower pre-tax income contribution from Enviroplex was primarily due to $15.3 million lower sales revenues in 2026.

Current wording

Pre-tax income contribution by Mobile Modular, Portable Storage and TRS-RenTelco was 60%, 9% and 23%, respectively, compared to 66%, 12% and 16%, respectively, for the comparable 2025 period. These results are discussed on a segment basis below. Enviroplex pre-tax income contribution was 8% in 2026, compared to 6% in 2025. The higher pre-tax income contribution from Enviroplex was primarily due to $2.4 million higher gross profit on sales revenues in 2026.

Previous wording

The provision for income taxes resulted in an effective tax rate of 26.9% and 26.1%, for the six month periods ended June 30, 2026 and 2025, respectively.

Current wording

The provision for income taxes resulted in an effective tax rate of 26.5% and 26.8%, for the nine month periods ended September 30, 2026 and 2025, respectively.

Previous wording

Adjusted EBITDA decreased $4.1 million, or 3%, to $156.9 million for the six month period ended June 30, 2026.

Current wording

Adjusted EBITDA increased $5.8 million, or 2%, to $263.4 million for the nine month period ended September 30, 2026.

Previous wording

For the six months ended June 30, 2026, Mobile Modular’s total revenues decreased $3.1 million, or 1%, to $284.8 million compared to the same period in 2025, primarily due to lower sales revenues, partly offset by higher rental operations revenues. The revenue decrease, together with lower gross profit on rental and sales revenues and higher selling and administrative expenses, partly offset by higher gross profit on rental related services revenues and a $1.4 million reduction in allocated interest expense, resulted in a $4.0 million decrease in pre-tax income to $51.1 million for the six months ended June 30, 2026, from $55.0 million for the same period in 2025.

Current wording

For the nine months ended September 30, 2026, Mobile Modular’s total revenues decreased $4.6 million, or 1%, to $464.8 million compared to the same period in 2025, primarily due to lower sales revenues, partly offset by higher rental operations revenues. The revenue decrease, together with lower gross profit on sales and rental revenues and higher selling and administrative expenses, partly offset by higher gross profit on rental related services revenues and a $1.3 million reduction in allocated interest expense, resulted in a $7.2 million decrease in pre-tax income to $88.9 million for the nine months ended September 30, 2026, from $96.1 million for the same period in 2025.

Previous wording

Gross Profit on Rental Revenues– Rental revenues increased $4.2 million, or 3%, due to 3% higher average rental equipment on rent and comparable average monthly rental rates in 2026. As a percentage of rental revenues, depreciation was 14% and 13% in 2026 and 2025, respectively, and other direct costs were 30% in 2026 and 28% in 2025, which resulted in gross margin percentages of 55% and 59% in 2026 and 2025, respectively. The higher rental revenues offset by lower rental margins, resulted in gross profit on rental revenues decreasing $3.1 million, or 3%, to $91.2 million in 2026.

Current wording

Gross Profit on Rental Revenues– Rental revenues increased $7.9 million, or 3%, due to 4% higher average rental equipment on rent, partly offset by 1% lower average monthly rental rates in 2026. As a percentage of rental revenues, depreciation was 14% and 13% in 2026 and 2025, respectively, and other direct costs were 30% in 2026 and 28% in 2025, which resulted in gross margin percentages of 56% and 58% in 2026 and 2025, respectively. The higher rental revenues offset by lower rental margins, resulted in gross profit on rental revenues decreasing $2.2 million, or 2%, to $140.2 million in 2026.

Previous wording

Gross Profit on Sales – Sales revenues decreased $10.9 million, or 17%, compared to 2025, primarily due to lower new equipment sales. The higher gross margin percentage of 34% in 2026 compared to 32% in 2025, together with lower sales revenue, resulted in gross profit on sales decreasing $2.4 million, or 12%, to $17.7 million. The higher gross margin on sales in 2026 was primarily due to a higher mix of used versus new sales. Sales occur routinely as a normal part of Mobile Modular’s rental business; however, these sales and related gross margins can fluctuate from quarter to quarter and year to year depending on customer requirements, the scope of work to be performed, equipment availability and funding.

Current wording

Gross Profit on Sales – Sales revenues decreased $16.2 million, or 14%, compared to 2025, primarily due to lower new equipment sales. The higher gross margin percentage of 35% in 2026 compared to 34% in 2025, together with lower sales revenue, resulted in gross profit on sales decreasing $4.3 million, or 11%, to $34.5 million. The higher gross margin on sales in 2026 was primarily due to a higher mix of used versus new sales. Sales occur routinely as a normal part of Mobile Modular’s rental business; however, these sales and related gross margins can fluctuate from quarter to quarter and year to year depending on customer requirements, the scope of work to be performed, equipment availability and funding.

Previous wording

Selling and administrative expenses increased $2.9 million, or 5%, to $56.4 million, primarily attributed to $1.9 million higher marketing and administrative expenses and $0.8 million higher employees' salaries and benefit costs.

Current wording

For the nine months ended September 30, 2026, selling and administrative expenses increased $4.8 million, or 5%, to $110.9 million, primarily due to a $2.5 million increase in marketing and administrative expenses, $1.5 million higher employees' salaries and benefit costs and $0.6 million higher allocated corporate expenses.

Previous wording

For the six months ended June 30, 2026, Portable Storage’s total revenues increased $0.8 million, or 2%, to $45.4 million compared to the same period in 2025, primarily due to higher sales and rental operations revenues. Lower gross profit on rental operations revenues and higher selling and administrative expenses, partly offset by $0.3 million lower allocated interest expense and higher gross profit on sales revenues, resulted in a decrease in pre-tax income of $3.7 million, or 30%, to $8.4 million in 2026.

Current wording

For the nine months ended September 30, 2026, Portable Storage’s total revenues increased $0.1 million to $69.1 million compared to the same period in 2025, primarily due to higher rental related services and sales revenues, offset by lower rental and other revenues. Lower gross profit on rental operations revenues and higher selling and administrative expenses, partly offset by $0.4 million lower allocated interest expense, resulted in a decrease in pre-tax income of $5.4 million, or 30%, to $12.6 million in 2026.

Previous wording

Gross Profit on Rental Revenues – Rental revenues decreased $0.1 million due to 1% lower average rental equipment on rent in 2026, partly offset by 1% higher average monthly rental rates. As a percentage of rental revenues, depreciation was 7% and 6% in 2026 and 2025, respectively, and other direct costs were 13% and 11% in 2026 and 2025, respectively, which resulted in gross margin percentage of 80% and 83% in 2026 and 2025, respectively. The lower rental revenues and lower rental margins resulted in gross profit on rental revenues decreasing $0.5 million, or 4%, to $13.5 million in 2026.

Current wording

Gross Profit on Rental Revenues – Rental revenues decreased $0.4 million, due to 1% lower average monthly rental rates and comparable average rental equipment on rent in 2026. As a percentage of rental revenues, depreciation was 7% and 6% in 2026 and 2025, respectively, and other direct costs were 13% and 11% in 2026 and 2025, respectively, which resulted in gross margin percentage of 80% and 83% in 2026 and 2025, respectively. The lower rental revenues together with lower rental margins resulted in gross profit on rental revenues decreasing $1.5 million, or 4%, to $40.0 million in 2026.

Previous wording

Gross Profit on Rental Related Services – Rental related services revenues was $8.4 million, an increase of $0.4 million compared to 2025. The gross margin on rental related services revenues was negative 19% in 2026, compared to negative 3% in 2025. The lower revenues coupled with lower gross margins in 2026 due to higher trucking costs, resulted in rental related services gross profit decreasing $1.4 million, when compared to 2025.

Current wording

Gross Profit on Rental Related Services – Rental related services revenues was $12.8 million, an increase of $0.6 million compared to 2025. The gross margin on rental related services revenues was negative 21% in 2026, compared to negative 6% in 2025. The higher revenues coupled with lower gross margins in 2026 due to higher trucking costs, resulted in rental related services gross profit decreasing $1.9 million, when compared to 2025.