McGrath RentCorp (NASDAQ:MGRC) today announced revenues for the quarter ended March 31, 2008, of $65.4 million, an increase of 8%, compared to $60.8 million in the first quarter 2007. The Company reported net income for the first quarter 2008 of $10.3 million, or $0.43 per diluted share, compared to net income of $9.3 million, or $0.37 per diluted share, in the first quarter 2007.

For the first quarter of 2008, the Company’s Mobile Modular division reported a 9% increase in rental revenues to $25.9 million compared with $23.8 million in the first quarter 2007, with gross profit on rental revenues increasing 9% to $17.2 million from $15.7 million in the first quarter 2007. Sales revenues decreased $1.3 million from $4.2 million in the first quarter 2007 to $2.9 million, and gross profit on sales decreased $0.4 million to $0.9 million in the first quarter 2008. Total gross profit increased 4% from $19.5 million in the first quarter 2007 to $20.3 million in the first quarter 2008. Selling and administrative expenses increased $0.5 million from $6.4 million to $6.9 million in the first quarter 2008. As a result, Mobile Modular’s pre-tax income increased 5% from $11.2 million to $11.7 million in the first quarter 2008.

For the first quarter of 2008, the Company’s TRS-RenTelco division reported a 15% increase in rental revenues to $22.3 million from $19.5 million in the first quarter of 2007, with gross profit on rental revenues increasing 20% to $9.6 million from $7.9 million in the first quarter 2007. Sales revenues increased 10% from $4.1 million to $4.5 million in the first quarter 2008, with gross profit on sales increasing $0.4 million to $1.8 million from $1.4 million in the first quarter 2007. Selling and administrative expenses increased $1.1 million to 5.9 million in the first quarter 2008. As a result, TRS-RenTelco’s pre-tax income increased 21% from $4.3 million to $5.2 million in the first quarter 2008.

Dennis Kakures, President and CEO of McGrath RentCorp, made the following comments regarding these results and future expectations:

“Our first quarter results reflect the continuing growth of our modulars and electronics rental businesses. Our long-term success has been and will continue to be driven by rental revenue growth, higher levels of gross profit and healthy gross margin on rents.

Mobile Modular’s 9% increase in rental revenues over the first quarter of last year is primarily related to classroom and commercial building shipments in the second and third quarters of 2007. We should experience a full 12 months of rental revenues on a large number of these orders. Gross profit on rents increasing 9% compared to a year ago was driven by the higher rental revenue level, and lower direct costs of rental operations to maintain and process rental equipment, as a percentage of rents.

TRS-RenTelco’s 15% increase in rental revenues over the first quarter of last year reflects a higher base of business entering 2008 and a healthy market environment during the first quarter. Gross profit on rents increasing 20% compared to a year ago was the result of higher rental revenues, and lower depreciation and direct costs of rental operations to calibrate and process rental equipment, as a percentage of rents.

We had strong operating performances in both rental divisions during the first quarter that led to an increase in net income compared to a year ago. Our quarter over quarter EPS growth also benefited from our buyback of approximately 1.7 million shares of the Company’s stock over the past two quarters. This reduction in outstanding shares compared to a year ago provided approximately a $0.02 diluted earnings per share benefit in our first quarter results.”

FIRST QUARTER 2008 HIGHLIGHTS (AS COMPARED TO FIRST QUARTER 2007)

• Rental revenues increased 11% to $48.3 million. Within rental revenues, Mobile Modular increased 9% from $23.8 million to $25.9 million; TRS-RenTelco increased 15% from $19.5 million to $22.3 million.
• Sales revenues decreased 2% to $9.2 million, resulting from lower sales volume in Mobile Modular, partly offset by higher sales volume in TRS-RenTelco and Enviroplex. The lower sales volume and higher gross margin percentage of 36.8% compared with 30.2% in 2007, resulted in a gross profit increase of $0.6 million. Sales revenues and related gross margins can fluctuate from quarter to quarter depending on customer requirements, equipment availability and funding.
• Depreciation of rental equipment increased 12% to $13.4 million, with Mobile Modular increasing 11% to $3.2 million from $2.9 million in 2007, and TRS-RenTelco increasing 12% to $10.2 million from $9.1 million in 2007.
• Debt increased $21.0 million during the quarter to $218.8 million, with the Company’s funded debt (notes payable) to equity ratio increasing from 0.81 to 1 at December 31, 2007 to 0.96 to 1 as of March 31, 2008. As of March 31, 2008, the Company had capacity to borrow an additional $24.2 million under its lines of credit.
• Repurchases of Common Stock totaled 968,749 shares for the first quarter of 2008 for an aggregate repurchase price of $21.9 million, or an average price of $22.61 per share. As of March 31, 2008, 210,878 shares remain authorized for repurchase.
• Dividend rate increased 11% to $0.20 per share for the first quarter 2008, as compared to $0.18 per share for the first quarter of 2007. On an annualized basis, this dividend represents a 3.3% yield on the May 7, 2008 close price of $23.99.
• Adjusted EBITDA increased 10% to $34.3 million for the first quarter of 2008 compared to $31.3 million for the first quarter of 2007. At March 31, 2008, the Company’s ratio of funded debt to the last twelve months Adjusted EBITDA was 1.55 compared to 1.43 at December 31, 2007. Adjusted EBITDA is defined as net income before minority interest in income of subsidiary, interest expense, provision for income taxes, depreciation, amortization and other non-cash stock-based compensation. A reconciliation of net income to Adjusted EBITDA and Adjusted EBITDA to net cash provided by operating activities can be found at the end of this release.

You should read this press release in conjunction with the financial statements and notes thereto included in the Company’s latest Form 10-K, 10-Q and other SEC filings. You can visit the Company’s web site at www.mgrc.com to access information on McGrath RentCorp, including the latest Form 10-K, 10-Q and other SEC filings.

FINANCIAL GUIDANCE

The Company reconfirms its 2008 full-year earnings per share to be in a range of $1.72 to $1.82 per diluted share. Such a forward-looking statement reflects McGrath RentCorp’s expectations as of May 8, 2008. Actual 2008 full-year earnings per share results may be materially different and affected by many factors, including those factors outlined in the “forward-looking statements” paragraph at the end of this press release.

About McGrath RentCorp

Founded in 1979, the Company, under the trade name Mobile Modular Management Corporation, rents and sells modular buildings to fulfill customers’ temporary and permanent space needs in California, Texas, Florida, North Carolina and Georgia. Mobile Modular believes it is the largest provider of relocatable classrooms for rental to school districts for grades K – 12 in California. The Company’s TRS-RenTelco division rents and sells electronic test equipment and is one of the leading providers of general purpose and communications test equipment in North America.

CONFERENCE CALL NOTE: As previously announced in its press release of April 9, 2008, McGrath RentCorp will host a conference call at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) on May 8, 2008 to discuss the first quarter 2008 results. To participate in the teleconference, dial 1-800-257-7063 (in the U.S.), or 1-303-262-2138 (outside the US), or visit the investor relations section of the Company’s website at www.mgrc.com. Telephone replay of the call will be available for 48 hours following the call by dialing 1-800-405-2236 (in the U.S.), or 1-303-590-3000 (outside the U.S.). The pass code for the call replay is 11111984.

This press release contains statements, which constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to a number of risks and uncertainties. These statements appear in a number of places. Such statements can be identified by the use of forward-looking terminology such as “believes”, “expects”, “may”, “estimates”, “will”, “should”, “plans” or “anticipates” or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy. These forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties. Actual results may vary materially from those in the forward-looking statements as a result of various factors. Important factors that could cause actual results to differ materially from the Company’s expectations are disclosed under "Risk Factors" and elsewhere in the Company’s 10-K, 10-Q and other SEC filings, including the following: the effectiveness of management’s strategies and decisions, general economic, stock market and business conditions, including in the states and countries where we sell or rent our products; continuing demand for our products; hiring, retention and motivation of key personnel; failure by third parties to manufacture our products in a timely manner and to our specifications; our ability to successfully implement information system upgrades; our ability to finance expansion and to locate and consummate acquisitions; fluctuations in interest rates and the Company’s ability to manage credit risk; our ability to effectively manage our rental assets; the risk that we may be subject to litigation and claims from employees, vendors and other third parties; fluctuations in the Company’s effective tax rate; changes in financial accounting standards; our failure to comply with internal control requirements; catastrophic loss to our facilities; state funding for education; new or modified statutory or regulatory requirements; success of the Company’s strategic growth initiatives; risks associated with doing business with government entities; seasonality of our educational and electronics business; intense industry competition; our ability to timely deliver, install and redeploy our modular products; significant increases in raw materials, labor, and other costs; and risks associated with operating internationally. There may be other factors not listed above that could cause actual results to vary materially from the forward-looking statements described in this press release. The Company assumes no obligation to update any forward-looking statements contained in this press release as a result of new information, future events, or developments.