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# McGrath's Classroom Builder Now Supplies 18% Of Pretax Profit As Its Two Biggest Rental Units Earn Less
- URL: https://www.bullished.co/mcgraths-classroom-builder-now-supplies-18-of-pretax-profit-as-its-two-biggest-rental-5a384961/
- Published: 2026-10-28T20:05:58.000Z
- Updated: 2026-10-28T20:05:58.000Z
- Description: Third-quarter net income rose 15% to $48.8 million, but Mobile Modular and Portable Storage both earned less than a year earlier.
- Author: Matteo Parrino
- Tags: Earnings, MGRC, Industry: Industrials

McGrath RentCorp, which rents modular buildings, storage containers and electronic test equipment, grew third-quarter net income 15% to [$48.8 million](https://www.sec.gov/Archives/edgar/data/0000752714/000119312526436106/mgrc-20260930.htm?ref=bullished.co), yet its two largest rental units both earned less. A classroom manufacturer and a test-equipment business tied to data-center construction carried the quarter, according to the company's 10-Q filed Wednesday.

## Enviroplex fills the gap

Enviroplex, which builds portable classrooms for California schools, supplied 18% of pretax income in the quarter, against 5% a year earlier. Its gross profit rose $8.2 million to $12.7 million on higher sales revenues and a better margin, with sales up $12.0 million.

The [prior quarter's filing](https://www.sec.gov/Archives/edgar/data/0000752714/000119312526323614/mgrc-20260630.htm?ref=bullished.co) put the unit's contribution at less than 1%. Earnings per diluted share rose 16% to $2.00 from $1.72, and revenue climbed 7% to $274.6 million.

Over nine months the picture is milder: Enviroplex contributed 8% of pretax income, against 6% a year earlier, and net income rose 3% to $109.5 million.

## Modular and storage slip

Mobile Modular, the largest segment, saw pretax income fall to $37.9 million from $41.1 million. Its share of the total dropped to 57% from 70%. Rental revenue rose 4%, but sales fell 10% on lower new-equipment sales, and selling and administrative costs rose 8%.

Average utilization slipped to 70.2% from 72.6% while average rental equipment grew 10%. Portable Storage's pretax income fell 29% to $4.2 million; rental revenue fell 3%, and higher trucking costs pushed its rental-related services margin to negative 25%.

TRS-RenTelco went the other way. Pretax income rose 47% to $12.5 million, rental revenue rose 26%, and average utilization climbed to 69.9% from 64.8%. CEO Phil Hawkins said demand stayed robust and the business benefited from projects supporting the buildout of new data centers.

## More spending, lower revenue outlook

In its [earnings release](https://www.sec.gov/Archives/edgar/data/0000752714/000119312526436105/mgrc-ex99%5F1.htm?ref=bullished.co), McGrath raised its expected gross rental equipment capital spending to $270 million to $290 million from $200 million to $220 million. It cut its total revenue outlook to $945 million to $960 million from $955 million to $985 million, citing lower Mobile Modular new equipment sales.

The spending is financed with debt. Net borrowings under bank lines of credit were $163.3 million in the first nine months, against net repayments of $40.6 million a year earlier, as rental equipment purchases climbed. The company also repurchased shares during the period, and its market value was about $2.9 billion.

Fourth-quarter results will show whether Enviroplex's sales hold up and whether the added fleet spending lifts Mobile Modular's utilization.

### Sources

- [10-Q Filing — McGrath RentCorp (MGRC)](https://www.sec.gov/Archives/edgar/data/0000752714/000119312526436106/mgrc-20260930.htm?ref=bullished.co) — SEC EDGAR
- [10-Q Filing — McGrath RentCorp (MGRC), Q2 FY2026 filed 2026-07-29 (comparison basis)](https://www.sec.gov/Archives/edgar/data/0000752714/000119312526323614/mgrc-20260630.htm?ref=bullished.co) — SEC EDGAR
- [Earnings release (8-K Item 2.02, mgrc-ex99\_1.htm) — McGrath RentCorp, filed 2026-10-28](https://www.sec.gov/Archives/edgar/data/0000752714/000119312526436105/mgrc-ex99%5F1.htm?ref=bullished.co) — SEC EDGAR