Segment Reporting

3 Months Ended

Mar. 31, 2022

Segment Reporting [Abstract]

Segment Reporting

NOTE 5. SEGMENT REPORTING

The Company’s four reportable segments are (1) its modular building and portable storage container rental 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 1 – Summary of Significant Accounting Policies” in the Company’s 2021 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, income before provision for income taxes and adjusted EBITDA. 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 amongst 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, 2022 and 2021 for the Company’s reportable segments is shown in the following table:

(dollar amounts in thousands)	Mobile Modular			TRS- RenTelco			Adler Tanks			Enviroplex 1			Consolidated
Three Months Ended March 31,
2022
Rental revenues	$	61,538		$	28,512		$	14,191		$        —			$	104,241
Rental related services revenues		18,361			671			5,285			—			24,317
Sales and other revenues		10,746			4,308			844			917			16,815
Total revenues		90,645			33,491			20,320			917			145,373
Depreciation of rental equipment		7,833			12,029			4,012			—			23,874
Gross profit		43,141			14,690			8,454			204			66,489
Selling and administrative expenses		24,692			6,590			6,522			1,323			39,127
Income (loss) from operations		18,449			8,100			1,932			(1,119	)		27,362
Interest (expense) income allocation		(1,821	)		(586	)		(544	)		131			(2,820	)
Income (loss) before provision for income taxes		16,628			7,527			1,388			(988	)		24,555
Adjusted EBITDA		30,405			20,653			6,707			(1,046	)		56,719
Rental equipment acquisitions		23,088			23,351			109			—			46,548
Accounts receivable, net (period end)		106,682			25,124			14,788			4,970			151,564
Rental equipment, at cost (period end)		1,059,030			378,766			308,790		—				1,746,586
Rental equipment, net book value (period end)		763,710			171,863			147,382		—				1,082,955
Utilization (period end) 2		77.6	%		64.7	%		50.4	%
Average utilization 2		77.1	%		64.6	%		48.3	%
2021
Rental revenues	$	46,657		$	27,276		$	12,154		$        —			$	86,087
Rental related services revenues		14,051			740			4,878			—			19,669
Sales and other revenues		7,940			5,587			678			1,234			15,439
Total revenues		68,648			33,603			17,710			1,234			121,195
Depreciation of rental equipment		5,819			11,362			4,074			—			21,255
Gross profit		34,934			14,753			7,043			351			57,081
Selling and administrative expenses		19,237			6,298			6,267			1,335			33,137
Income (loss) from operations		15,697			8,455			776			(984	)		23,944
Interest (expense) income allocation		(1,046	)		(420	)		(431	)		114			(1,783	)
Income (loss) before provision for income taxes		14,651			7,980			345			(870	)		22,106
Adjusted EBITDA		23,955			20,392			5,700			(921	)		49,126
Rental equipment acquisitions		8,428			16,380			(102	)	—				24,706
Accounts receivable, net (period end)		81,378			21,367			13,030			6,433			122,208
Rental equipment, at cost (period end)		886,299			342,105			314,444		—				1,542,848
Rental equipment, net book value (period end)		611,097			159,410			165,436		—				935,943
Utilization (period end) 2		75.8	%		69.2	%		43.0	%
Average utilization 2		75.8	%		68.1	%		40.3	%

1. Gross Enviroplex sales revenues were $917 and $2,090 for the three months ended March 31, 2022 and 2021, respectively. There were $0 and $856 inter-segment sales to Mobile Modular in the three months ended March 31, 2022 and 2021, 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 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, 2022 and 2021. Revenues from foreign country customers accounted for 4% and 5% of the Company’s total revenues for the same periods, respectively.