McGrath RentCorp (NASDAQ:MGRC) Reports Q3 2025 Revenue Miss, Shares Dip

McGrath RentCorp Reports Mixed Q3 2025 Results, Shares Dip After Hours

MCGRATH RENTCORP (NASDAQ:MGRC) announced financial results for the third quarter ended September 30, 2025, delivering a performance that fell short of analyst expectations on the top line while meeting a key profitability metric. The company's stock was down approximately 2.1% in after-hours trading following the release, indicating a muted market response to the quarterly update.

Earnings and Revenue Versus Estimates

The business-to-business rental company reported quarterly revenues of $256.4 million, which represents a 4% decrease compared to the same period last year. More critically, this figure came in below the analyst consensus estimate of $271.9 million.

On the profitability front, the company reported diluted earnings per share (EPS) of $1.72. This result was below the analyst estimate of $1.89. However, the earnings picture requires context. The prior year's third quarter included a significant, one-time $180.0 million merger termination payment from WillScot Mobile Mini. Excluding this payment and related transaction costs from the 2024 results, the company's net income for Q3 2025 decreased by $3.6 million, or 8%, year-over-year.

Financial Outlook and Analyst Expectations

Looking ahead, McGrath RentCorp provided an updated financial outlook for the full year 2025. The company now expects:

• Total Revenue: $935 to $955 million (narrowed from a previous range of $925 to $960 million)
• Adjusted EBITDA: $350 to $357 million (narrowed from a previous range of $347 to $356 million)

This updated revenue guidance brackets the current analyst consensus estimate of $968.1 million for the full year, suggesting management's expectations are generally in line with, or slightly below, market projections. For the upcoming fourth quarter, analysts are estimating revenue of $257.99 million.

Quarterly Performance Summary

Beyond the headline earnings miss, the company's third-quarter results revealed several key operational trends:

• Rental Revenue Growth: Rental operations revenues increased 4% to $178.1 million, showing core strength in the company's primary leasing activities.
• Sales Revenue Decline: Sales revenues decreased 18% to $76.1 million, attributed to lower new equipment sales.
• Divisional Performance: The company's three main divisions showed mixed results:
  • Mobile Modular: Rental revenues grew 2%, but Adjusted EBITDA decreased 10% due to higher costs.
  • Portable Storage: Rental revenues grew 1%, marking the division's first year-over-year growth since Q1 2024.
  • TRS-RenTelco: This division was a standout, with rental revenues up 9% and Adjusted EBITDA increasing 7%.

President and CEO Joe Hanna commented on the results, stating, "We delivered solid third quarter results, with rental revenue growth in each of our operating segments, despite some challenging market demand conditions." He noted that the company has "good momentum entering the fourth quarter" and remains focused on finishing the year strongly.

Market Reaction and Conclusion

The after-hours stock decline appears to be a direct reaction to the company's revenue miss against estimates and the year-over-year decrease in sales. While the company demonstrated stability in its core rental business and saw a strong performance from its TRS-RenTelco division, the softer sales revenue and overall top-line shortfall seem to have tempered investor enthusiasm. The maintained and slightly narrowed full-year outlook provides a degree of confidence, but the market is likely awaiting clearer signs of sales recovery and more robust top-line growth.

For a detailed look at historical earnings, future estimates, and analyst projections for McGrath RentCorp, you can review the data here.

Disclaimer: This article is for informational purposes only and does not constitute investment advice, nor does it recommend buying or selling any securities. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.