Segment Reporting

3 Months Ended

Mar. 31, 2017

Segment Reporting [Abstract]

Segment Reporting

NOTE 5. 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, 2016. 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 three months ended March 31, 2017 and 2016 for the Company’s reportable segments is shown in the following table:

(dollar amounts in thousands)	Mobile Modular			TRS- RenTelco			Adler Tanks			Enviroplex1			Consolidated
Three Months Ended March 31,
2017
Rental revenues	$	33,654		$	19,746		$	14,578		$       —			$	67,978
Rental related services revenues		11,588			658			5,689		—				17,935
Sales and other revenues		3,061			4,910			194			759			8,924
Total revenues		48,303			25,314			20,461			759			94,837
Depreciation of rental equipment		5,333			8,091			3,955			—			17,379
Gross profit		22,444			11,393			9,555			278			43,670
Selling and administrative expenses		13,800			5,689			7,267			1,092			27,848
Income (loss) from operations		8,644			5,704			2,288			(814	)		15,822
Interest (expense) income allocation		(1,591	)		(546	)		(738	)		86			(2,789	)
Income (loss) before provision for income taxes		7,053			5,384			1,550			(728	)		13,259
Rental equipment acquisitions		7,782			12,021			749		—				20,552
Accounts receivable, net (period end)		53,779			18,603			15,814			4,356			92,552
Rental equipment, at cost (period end)		773,597			248,291			309,131		—				1,331,019
Rental equipment, net book value (period end)		545,953			92,561			218,467		—				856,981
Utilization (period end) 2		76.5	%		62.1	%		53.4	%
Average utilization 2		76.8	%		62.2	%		52.3	%
2016
Rental revenues	$	31,155		$	20,928		$	14,449		$       —			$	66,532
Rental related services revenues		11,205			784			5,602			—			17,591
Sales and other revenues		2,724			6,272			432			148			9,576
Total revenues		45,084			27,984			20,483			148			93,699
Depreciation of rental equipment		5,126			9,388			4,026			—			18,540
Gross profit		20,653			11,016			8,942			44			40,655
Selling and administrative expenses		12,462			5,797			7,262			876			26,397
Income (loss) from operations		8,191			5,219			1,680			(832	)		14,258
Interest (expense) income allocation		(1,947	)		(730	)		(934	)		55			(3,556	)
Income (loss) before provision for income taxes		6,244			4,640			746			(777	)		10,853
Rental equipment acquisitions		11,579			7,729			(18	)	—				19,290
Accounts receivable, net (period end)		50,915			21,393			15,386			4,189			91,883
Rental equipment, at cost (period end)		747,475			260,324			309,823		—				1,317,622
Rental equipment, net book value (period end)		535,308			98,291			233,616		—				867,215
Utilization (period end) 2		75.4	%		59.9	%		51.0	%
Average utilization 2		76.1	%		59.6	%		50.3	%

1. Gross Enviroplex sales revenues were $759 and $148 for the three months ended March 31, 2017 and 2016, respectively. There were no inter-segment sales to Mobile Modular in those periods requiring 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 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 three months ended March 31, 2017 and 2016. Revenues from foreign country customers accounted for 5% of the Company’s total revenues for the same periods.