Segment Reporting

9 Months Ended

Sep. 30, 2016

Segment Reporting [Abstract]

Segment Reporting

NOTE 6. SEGMENT REPORTING

The Company’s four reportable segments are (1) its modular building and portable storage segment (“Mobile Modular”); (2) its electronic test equipment segment (“TRS-RenTelco”); (3) its containment solutions for the storage of hazardous and non-hazardous liquids and solids segment (“Adler Tanks”); 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 2 – Significant Accounting Policies” in the Company’s annual report on Form 10-K for the year ended December 31, 2015. Management focuses on several key measures to evaluate and assess each segment’s performance, including rental revenue growth, gross profit, 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, TRS-RenTelco and Adler Tanks based on their pro-rata share of direct revenues. Interest expense is allocated among Mobile Modular, TRS-RenTelco and Adler Tanks based on their pro-rata share of average rental equipment at cost, intangible assets, accounts receivable, deferred income and customer security deposits. The Company does not report total assets by business segment.  Summarized financial information for the nine months ended September 30, 2016 and 2015 for the Company’s reportable segments is shown in the following table:

(dollar amounts in thousands)	Mobile Modular			TRS- RenTelco			Adler Tanks			Enviroplex1			Consolidated
Nine Months Ended September 30,
2016
Rental revenues	$	96,002		$	61,562		$	43,472		$	—		$	201,036
Rental related services revenues		37,034			2,156			17,838		—				57,028
Sales and other revenues		25,416			18,491			1,039			15,787			60,733
Total revenues		158,452			82,209			62,349			15,787			318,797
Depreciation of rental equipment		15,642			26,939			12,009		—				54,590
Gross profit		67,329			34,033			28,362			5,120			134,844
Selling and administrative expenses		38,162			16,444			20,786			2,889			78,281
Income from operations		29,167			17,589			7,576			2,231			56,563
Interest (expense) income allocation		(5,264	)		(1,921	)		(2,487	)		186			(9,486	)
Income before provision for income taxes		23,903			15,727			5,089			2,417			47,136
Rental equipment acquisitions		35,363			24,991			404		—				60,758
Accounts receivable, net (period end)		63,752			20,267			15,922			4,063			104,004
Rental equipment, at cost (period end)		763,777			252,573			308,852		—				1,325,202
Rental equipment, net book value (period end)		543,141			93,894			225,493		—				862,528
Utilization (period end) 2		77.6	%		62.4	%		52.1	%
Average utilization 2		76.3	%		60.1	%		49.9	%
2015
Rental revenues	$	84,242		$	66,612		$	52,148		$	—		$	203,002
Rental related services revenues		33,904			2,271			18,281			—			54,456
Sales and other revenues		15,971			16,385			1,082			8,366			41,804
Total revenues		134,117			85,268			71,511			8,366			299,262
Depreciation of rental equipment		14,218			30,335			11,954			—			56,507
Gross profit		56,263			35,293			36,383			2,212			130,151
Selling and administrative expenses		34,436			17,059			20,755			2,411			74,661
Income (loss) from operations		21,827			18,234			15,628			(199	)		55,490
Interest (expense) income allocation		(3,790	)		(1,580	)		(1,953	)		141			(7,182	)
Income (loss) before provision for income taxes		18,037			16,200			13,675			(58	)		47,854
Rental equipment acquisitions		59,501			37,822			8,328			—			105,651
Accounts receivable, net (period end)		60,132			23,649			20,312			3,467			107,560
Rental equipment, at cost (period end)		717,892			266,034			309,779			—			1,293,705
Rental equipment, net book value (period end)		515,207			107,801			241,269			—			864,277
Utilization (period end) 2		77.9	%		60.5	%		57.0	%
Average utilization 2		75.3	%		60.2	%		59.9	%

1. Gross Enviroplex sales revenues were $15,872 and $9,077 for the nine months ended September 30, 2016 and 2015, respectively, which include inter-segment sales to Mobile Modular of $85 and $711, respectively, which have been eliminated 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 for Mobile Modular and Adler Tanks excluding new equipment inventory.  The Average Utilization for the period is calculated using the average costs of rental equipment.

No single customer accounted for more than 10% of total revenues for the nine months ended September 30, 2016 and 2015. Revenues from foreign country customers accounted for 5% of the Company’s total revenues in each of the same periods.