McGrath Q3 EBITDA Rises 10% as Fleet Spending Outlook Increases

McGrath RentCorp reported higher third-quarter revenue and adjusted EBITDA as strong demand for electronic test equipment and continued modular rental growth offset weakness in portable storage and modular equipment sales. The rental company also reduced its 2026 revenue outlook, narrowed its adjusted EBITDA range and substantially increased planned rental fleet investment.

For the three months ended Sept. 30, total revenue rose 7% year over year to $274.6 million. Rental revenue increased 8% to $139.1 million, while rental-related services revenue advanced 2% to $50.4 million. Sales revenue grew 9% to $82.9 million.

Gross profit increased 10% to $130.9 million, and adjusted EBITDA rose 10% to $106.5 million. McGrath defines adjusted EBITDA as net income before interest expense, income taxes, depreciation, amortization, non-cash impairment costs, share-based compensation and transaction costs.

For the first nine months of 2026, total revenue increased 1% to $694.3 million. Rental revenue rose 6% and rental-related services revenue gained 5%, while sales fell 12%. Nine-month adjusted EBITDA increased 2% to $263.4 million.

Test-equipment demand drives growth

TRS-RenTelco delivered the strongest third-quarter growth among McGrath’s operating businesses, benefiting from projects supporting the buildout of new data centers. Segment revenue increased 23% to $45.3 million, with rental revenue up 26% to $35.4 million.

TRS-RenTelco’s adjusted EBITDA rose 27% to $25.7 million, and its margin increased to 57% from 55%. Average utilization reached 69.9%, compared with 64.8% a year earlier, while the average monthly rental rate increased to 4.61% from 4.22%. McGrath said it is investing additional capital in the segment’s rental fleet to support current market conditions and its positive outlook.

Mobile Modular rental revenue increased 4% to $86.9 million, supported by continued growth among commercial customers. However, total segment revenue declined 1% to $179.9 million as lower new-equipment sales offset rental momentum. Adjusted EBITDA, excluding Enviroplex, fell 3% to $62.6 million, with the margin easing to 35% from 36%.

Average Mobile Modular utilization was 70.2% in the quarter, down from 73.7% a year earlier, while its average monthly rental rate was 2.83%, compared with 2.88%. Monthly revenue per unit across the total fleet increased 8% to $932, and the comparable measure for new shipments over the latest 12 months rose 7% to $1,271.

Enviroplex, McGrath’s modular classroom manufacturing business, recorded adjusted EBITDA of $10.7 million, up from $2.5 million in the prior-year quarter.

McGrath plans further Mobile Modular fleet investment to support a large commercial project and regional expansion. The company’s broader modular strategy includes geographic expansion, Mobile Modular Plus services, site-related services and custom modular projects. Mobile Modular Plus revenue increased 24% to $33.9 million during the first nine months, while site-related services revenue fell 8% to $24.1 million. New sales revenue declined 23% to $61.8 million.

Portable Storage remains under pressure

Portable Storage continued to face soft demand and higher costs for equipment preparation, trucking and sales coverage. Third-quarter revenue declined 3% to $23.7 million, including a 3% decrease in rental revenue to $16.8 million.

Adjusted EBITDA fell 20% to $7.4 million, and the margin contracted to 31% from 38%. Average utilization was 60.8%, compared with 61.1% a year earlier, while the average monthly rental rate decreased to 3.89% from 3.96%.

Revenue outlook reduced as fleet spending rises

McGrath now expects 2026 revenue of $945 million to $960 million, compared with its previous range of $955 million to $985 million. The company said the updated outlook reflects continued rental momentum at Mobile Modular and TRS-RenTelco, partly offset by lower modular new-equipment sales.

The adjusted EBITDA forecast was narrowed to $365 million to $373 million from $363 million to $375 million. McGrath continues to project another year of profitable growth.

Gross rental equipment capital expenditures are now expected to reach $270 million to $290 million, up from the previous forecast of $200 million to $220 million. The higher spending plan reflects additional investment in the Mobile Modular and TRS-RenTelco fleets.

The outlook remains subject to tariff actions, macroeconomic and fiscal-policy uncertainty, government budget constraints and conditions in education, commercial construction, semiconductor, communications and general-purpose test-equipment markets. McGrath also cited pricing execution, rental asset management, acquisition integration, talent retention and uncertainty associated with its chief executive transition among the factors that could affect results.