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Segment Reporting
 9 Months Ended
Sep. 30, 2024
Segment Reporting [Abstract]  
Segment Reporting

NOTE 10. SEGMENT REPORTING

During the quarter ended December 31, 2023, the Company determined that its Portable Storage business segment met the criteria for separate recognition as defined in the Accounting Standards Codification ("ASC") Topic 280, Segment Reporting. The guidance under this topic requires a public business entity to evaluate both quantitative and qualitative thresholds to determine the significance of a business segment and whether the separate reporting of a business segment enhances the users' understanding of the reporting entity's performance, future net cash flows and judgments. The Company evaluated the guidance within Topic 280 and made its determination to separately report the Portable Storage segment primarily due to the Company's continued growth in container fleet purchases and related increased revenues and improved profitability performance when compared to previously reported periods. In addition to this determination, the Company also divested its Adler Tanks business segment during the year ended December 31, 2023. Additional information regarding the divestiture of Adler Tanks can be found in Note 5 of the condensed consolidated financial statements.

At September 30, 2024, the Company was comprised of four reportable segments: (1) its modular building segment (“Mobile Modular”); (2) its portable storage container segment ("Portable Storage"); (3) its electronic test equipment segment (“TRS-RenTelco”); and (4) its classroom manufacturing segment selling modular buildings used primarily as classrooms in California (“Enviroplex”). The operations of each of these segments are described in Part I – Item 1, “Business,” and the accounting policies of the segments are described in “Note 1 – Summary of Significant Accounting Policies” in the Company’s 2023 Annual Report. Management focuses on several key measures to evaluate and assess each segment’s performance, including rental revenue growth, gross profit and gross margins, income from operations and income before provision for income taxes. Excluding interest expense, allocations of revenue and expense not directly associated with one of these segments are generally allocated to Mobile Modular, Portable Storage and TRS-RenTelco based on their pro-rata share of direct revenues. Interest expense is allocated amongst Mobile Modular, Portable Storage and TRS-RenTelco based on their pro-rata share of average rental equipment at cost, intangible assets, accounts receivable, deferred income and customer security deposits. During the period ended September 30, 2024, the Company determined that transaction costs incurred by the Company attributed to the terminated Merger Agreement with WillScot Mobile Mini were significant and required separate presentation. For the three and nine-months ended September 30, 2024, the Company has reported the terminated Merger Agreement transaction costs in the Corporate segment and excluded such costs from Selling and administrative expenses. The Company does not report total assets by business segment. Summarized financial information for the nine months ended September 30, 2024 and 2023 for the Company’s reportable segments are shown in the following table:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(dollar amounts in thousands)

 

Mobile
Modular

 

 

Portable Storage

 

 

TRS-
RenTelco

 

 

Enviroplex 1

 

 

Corporate (Unallocated)

 

 

Consolidated

 

Nine Months Ended September 30,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental revenues

 

$

236,040

 

 

$

53,270

 

 

$

76,398

 

 

$ —

 

 

$

—

 

 

$

365,708

 

Rental related services revenues

 

 

95,450

 

 

 

13,768

 

 

 

2,422

 

 

—

 

 

 

—

 

 

 

111,640

 

Sales and other revenues

 

 

132,046

 

 

 

4,796

 

 

 

22,414

 

 

 

30,591

 

 

 

—

 

 

 

189,847

 

Total revenues

 

 

463,536

 

 

 

71,835

 

 

 

101,234

 

 

 

30,591

 

 

 

—

 

 

 

667,196

 

Depreciation of rental equipment

 

 

29,994

 

 

 

2,971

 

 

 

33,547

 

 

—

 

 

 

—

 

 

 

66,512

 

Gross profit

 

 

222,901

 

 

 

48,939

 

 

 

40,939

 

 

 

7,882

 

 

 

—

 

 

 

320,661

 

Selling and administrative expenses

 

 

100,882

 

 

 

22,064

 

 

 

20,450

 

 

 

5,368

 

 

 

—

 

 

 

148,764

 

Other income

 

 

(6,220

)

 

 

(1,319

)

 

 

(1,742

)

 

 

—

 

 

 

—

 

 

 

(9,281

)

Income from operations

 

 

128,239

 

 

 

28,194

 

 

 

22,231

 

 

 

2,514

 

 

 

—

 

 

 

181,178

 

Interest expense (income) allocation

 

 

29,951

 

 

 

4,255

 

 

 

6,070

 

 

 

(1,893

)

 

 

—

 

 

 

38,383

 

Gain on merger termination from WillScot Mobile Mini 3

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(180,000

)

 

 

(180,000

)

WillScot Mobile Mini transaction costs 4

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

61,157

 

 

 

61,157

 

Income before provision for income taxes

 

 

98,288

 

 

 

23,939

 

 

 

16,214

 

 

 

4,407

 

 

 

118,843

 

 

 

261,691

 

Rental equipment acquisitions

 

 

129,837

 

 

 

7,818

 

 

 

16,295

 

 

—

 

 

 

—

 

 

 

153,950

 

Accounts receivable, net (period end)

 

 

182,617

 

 

 

10,481

 

 

 

19,642

 

 

 

11,789

 

 

 

—

 

 

 

224,529

 

Rental equipment, at cost (period end)

 

 

1,398,422

 

 

 

241,620

 

 

 

356,979

 

 

—

 

 

 

—

 

 

 

1,997,021

 

Rental equipment, net book value (period end)

 

 

1,051,703

 

 

 

220,139

 

 

 

119,840

 

 

—

 

 

 

—

 

 

 

1,391,682

 

Utilization (period end) 2

 

 

76.5

%

 

 

62.0

%

 

 

59.0

%

 

 

 

 

 

 

 

 

 

Average utilization 2

 

 

78.0

%

 

 

66.1

%

 

 

56.8

%

 

 

 

 

 

 

 

 

 

2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental revenues

 

$

209,622

 

 

$

54,776

 

 

$

86,375

 

 

$ —

 

 

$

—

 

 

$

350,773

 

Rental related services revenues

 

 

83,799

 

 

 

15,359

 

 

 

2,323

 

 

—

 

 

 

—

 

 

 

101,481

 

Sales and other revenues

 

 

118,188

 

 

 

4,057

 

 

 

24,376

 

 

 

11,379

 

 

 

—

 

 

 

158,000

 

Total revenues

 

 

411,609

 

 

 

74,192

 

 

 

113,074

 

 

 

11,379

 

 

 

—

 

 

 

610,254

 

Depreciation of rental equipment

 

 

27,196

 

 

 

2,570

 

 

 

36,733

 

 

—

 

 

 

—

 

 

 

66,499

 

Gross profit

 

 

183,682

 

 

 

50,288

 

 

 

47,184

 

 

 

2,357

 

 

 

—

 

 

 

283,511

 

Selling and administrative expenses

 

 

101,360

 

 

 

23,282

 

 

 

23,576

 

 

 

4,814

 

 

 

—

 

 

 

153,032

 

Other income

 

 

(2,290

)

 

 

(450

)

 

 

(819

)

 

 

—

 

 

 

—

 

 

 

(3,559

)

Income (loss) from operations

 

 

84,612

 

 

 

27,456

 

 

 

24,427

 

 

 

(2,457

)

 

 

—

 

 

 

134,038

 

Interest expense (income) allocation

 

 

20,607

 

 

 

3,522

 

 

 

6,008

 

 

 

(1,703

)

 

 

—

 

 

 

28,434

 

Income (loss) before provision for income taxes

 

 

64,005

 

 

 

23,934

 

 

 

18,585

 

 

 

(754

)

 

 

—

 

 

 

105,770

 

Rental equipment acquisitions

 

 

121,751

 

 

 

20,316

 

 

 

21,801

 

 

—

 

 

 

—

 

 

 

163,868

 

Accounts receivable, net (period end)

 

 

170,247

 

 

 

16,107

 

 

 

29,086

 

 

 

8,829

 

 

 

—

 

 

 

224,269

 

Rental equipment, at cost (period end)

 

 

1,245,462

 

 

 

228,897

 

 

 

383,006

 

 

—

 

 

 

—

 

 

 

1,857,365

 

Rental equipment, net book value (period end)

 

 

929,776

 

 

 

211,418

 

 

 

150,674

 

 

—

 

 

 

—

 

 

 

1,291,868

 

Utilization (period end) 2

 

 

80.2

%

 

 

77.2

%

 

 

60.3

%

 

 

 

 

 

 

 

 

 

Average utilization 2

 

 

79.7

%

 

 

78.4

%

 

 

59.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
1.
Gross Enviroplex sales revenues were $30,593 and $16,401 for the nine months ended September 30, 2024 and 2023, respectively. There were $2 and $218 of inter-segment sales to Mobile Modular in the nine months ended September 30, 2024 and 2023, respectively, which required elimination in consolidation.
2.
Utilization is calculated each month by dividing the cost of rental equipment on rent by the total cost of rental equipment, excluding accessory equipment, and new equipment inventory. The Average utilization for the period is calculated using the average costs of rental equipment.
3.
During the period ended September 30, 2024, the Company received $180 million in cash proceeds attributed to the mutual decision to terminate the Merger Agreement. These proceeds are reported as non-operating income on the Company's Condensed Consolidated Statements of Income and are reported in the Company's Corporate segment.
4.
During the period ended September 30, 2024, the Company determined that transaction costs incurred by the Company attributed to the terminated Merger Agreement were significant. Due to this determination, the Company has separately reported these transaction costs in the Company's Corporate segment and excluded such costs from Selling and administrative expenses. The total transaction costs excluded from Selling and administrative expenses for the six months ended June 30, 2024, and the three months ended March 31, 2024, for Mobile Modular, Portable Storage and TRS-RenTelco was $15.5 million, $2.6 million and $3.6 million, respectively, and $6.5 million, $1.2 million and $1.7 million, respectively.

No single customer accounted for more than 10% of total revenues for the nine months ended September 30, 2024 and 2023. Revenues from foreign country customers accounted for 2% and 3% of the Company’s total revenues for the same periods, respectively.