McGrath RentCorp (MGRC): Business Model Canvas [Dec-2025 Updated]

You're looking to really dissect how a diversified equipment rental giant actually makes its money, right? Well, let's cut through the noise on McGrath RentCorp (MGRC). Honestly, their whole game is built on renting out everything from modular classrooms to specialized test gear, aiming for a hefty total revenue guidance of $935 million to $955 million for 2025. Think about it: they manage a rental fleet asset base valued over $1.415 billion while balancing high fixed costs and significant capital expenditures guided between $115M-$125M this year. If you want the full, precise breakdown of their key partnerships, customer segments, and how they turn that massive asset base into cash flow, you need to see the whole canvas below.

McGrath RentCorp (MGRC) - Canvas Business Model: Key Partnerships

You're looking at how McGrath RentCorp keeps its operations funded and supplied as of late 2025. The partnerships here are critical for maintaining the fleet size and funding growth, especially with the stated focus on tuck-in acquisitions.

The relationship with modular unit manufacturers is foundational to the Mobile Modular segment. While specific 2025 supplier concentration data isn't public, the scale of the Mobile Modular fleet shows the importance of these manufacturing relationships. As of the first quarter of 2025, the Mobile Modular segment rental fleet comprised approximately 43,000 units, with an original acquisition cost valuation of $1.415 billion.

• Modular unit manufacturers (one supplied 30% of units in 2022)
• Logistics and specialized transport providers for equipment delivery
• Pipeline of small, regional tuck-in acquisition targets

Financing partners are essential for capital expenditures and M&A. McGrath RentCorp has a substantial credit facility in place to support its working capital and capital expenditure needs. The company is deemed to have appropriate leverage levels to pursue its M&A strategy.

McGrath RentCorp maintains an active M&A pipeline, specifically targeting smaller 'tuck-in' acquisitions to bolster rental revenues and service offerings. Management stated they aim to close some transactions in 2025. This strategy is supported by the company's current leverage profile and strong cash flow generation, which provides flexibility. For instance, net cash provided by operating activities year-to-date in 2025 was $175 million.

• Active dialogue with potential tuck-in targets ongoing in 2025.
• The company is focused on growing Mobile Modular Plus and site-related services, which involves sourcing specific solutions from partners flexibly, rather than owning all required equipment.

Finance: draft 13-week cash view by Friday.

McGrath RentCorp (MGRC) - Canvas Business Model: Key Activities

Rental fleet acquisition, maintenance, and refurbishment

McGrath RentCorp actively manages its asset base, focusing capital deployment on maintaining and expanding the rental fleet, with a clear preference for operating leases over outright sales in the core business. Gross rental equipment capital expenditures for the full year 2025 are projected to be between $115 million and $125 million. Year-to-date through the third quarter of 2025, rental equipment purchases totaled $92 million. The company noted that in Q3 2025, it used off-rent inventory rather than investing in new product, managing the fleet with a sharp focus on deploying capital efficiently. The Mobile Modular segment alone has a rental fleet valued at $1.415 billion (original acquisition cost) as of Q1 2025, comprising approximately 43,000 units. The Portable Storage segment has a fleet of about 42,000 units valued at $240 million. Maintenance and preparation activities are reflected in operating costs; for instance, Mobile Modular saw other direct costs increase by 18% to $24.2 million in Q3 2025, driven by higher labor and material costs to prepare equipment for customer demand.

Geographic expansion and new branch network development

A key activity centers on expanding market reach, particularly within the Mobile Modular segment, which is the primary growth driver. Management stated in Q3 2025 that they have taken steps to enter new regions. The company maintains a strong North American presence, generating 99% of its revenues in this market. The strategic focus on Mobile Modular includes expanding geographic coverage to support growth. The company's funded debt-to-EBITDA ratio stood at 1.68 to 1 as of early 2025, indicating capacity to support organic and inorganic growth investments. The company's Q3 2025 selling and administrative expenses increased by $3.2 million to $52.5 million, partly attributed to broader sales coverage to support long-term business growth.

Execution of strategic tuck-in acquisitions for growth

McGrath RentCorp actively pursues strategic tuck-in acquisitions to increase coverage, a priority noted in late 2025. The company has a history of acquisitions, with the most recent reported being VESTA Modular in February 2023 for $400 million. The stated strategic priority for 2025 includes increasing coverage through tuck-in acquisitions. The company's total acquisitions history includes 5 deals across 3 sectors, with activity peaking in 2021 with 2 acquisitions.

Managing the diverse rental portfolio (modular, storage, test equipment)

The company manages three distinct rental segments: Mobile Modular, Portable Storage, and TRS-RenTelco. The overall business mix is heavily weighted toward Mobile Modular, which accounted for 75% of total revenues and 67% of total Adjusted EBITDA in 2024. The company reported total revenues of $256.4 million for Q3 2025, with rental operations contributing $178.1 million (an increase of 4% year-over-year). The performance across segments in Q3 2025 shows varied activity:

Developing and selling value-added services (Mobile Modular Plus)

Enhancing the core rental offering with services is a critical activity, especially within the Mobile Modular segment. Management highlighted that ongoing efforts with Mobile Modular Plus and site-related services continue to go well, both experiencing healthy growth in Q3 2025. Mobile Modular rental related services revenues increased by 5% to $44.5 million in Q3 2025. This service revenue growth outpaced the segment's rental revenue growth of 2% for the same period. The company has a 34-year track record of consecutive dividend increases, reflecting confidence in its operational cash generation, which was $175 million provided by operating activities year-to-date through Q3 2025.

• Mobile Modular Plus and site-related services experienced healthy growth in Q3 2025.
• Mobile Modular rental related services revenue was $44.5 million in Q3 2025.
• The company projects full-year 2025 total revenue between $935 million and $955 million.

McGrath RentCorp (MGRC) - Canvas Business Model: Key Resources

You're looking at the core assets that let McGrath RentCorp actually deliver its value proposition. These aren't just line items on a balance sheet; they are the physical and intellectual capital that generate revenue. Honestly, for a rental business, the fleet is everything.

The foundation of McGrath RentCorp's physical resources is its massive, diversified rental fleet. The company anchors its operations on the scale and value of these assets, which are deployed across its three main segments. The Mobile Modular segment, the company's largest, holds rental assets with an original cost valued over $1.415 billion. This represents the core infrastructure for their space solutions.

The specialized side of the business, TRS-RenTelco, maintains a significant inventory of high-value equipment. The specialized electronic test equipment fleet within TRS-RenTelco is specifically valued at $334 million. This high-tech inventory is a distinct resource compared to the construction-focused modular assets.

To manage this scale, McGrath RentCorp relies on its physical footprint and internal systems. The company maintains an extensive North American branch and service network, which is crucial for logistics, installation, and customer support across the continent. Furthermore, proprietary IT systems are a key intangible resource, used specifically for fleet tracking and utilization management to maximize the return on these expensive assets.

The ability to invest in and maintain these resources is supported by the company's financial standing. McGrath RentCorp has a strong balance sheet, which directly supports its planned capital expenditures for the year. For fiscal year 2025, the company has signaled its intention to spend between $115M-$125M on Gross Rental Equipment Capital Expenditures. This disciplined capital allocation is a resource in itself, especially when considering the funded debt-to-EBITDA ratio was reported at 1.68 to 1 at the end of 2024.

Here's a quick look at the composition of the major rental fleets based on the latest segment data available from early 2025:

The overall scale of the company's assets provides a tangible measure of its resource base. As of September 2025, McGrath RentCorp reported total assets on its balance sheet of NZ$4.09 Billion.

The operational resources also include the specialized capabilities that drive efficiency:

• Extensive North American branch and service network for deployment and support.
• Proprietary IT systems for real-time fleet tracking and utilization optimization.
• Strong relationships with suppliers for continuous asset procurement.
• Decades of experience in managing complex modular projects.

Finance: draft a 13-week cash flow forecast incorporating the high end of the 2025 CapEx guidance by Friday.

McGrath RentCorp (MGRC) - Canvas Business Model: Value Propositions

You're looking at how McGrath RentCorp delivers value across its distinct business lines, which is key to understanding their overall financial picture. The value propositions are deeply tied to the operational metrics we see in their latest reports.

Flexible, immediate space solutions for temporary or permanent needs

The core value here is providing immediate physical space, primarily through the Mobile Modular segment. This isn't just about dropping off a box; it's about providing scalable solutions for commercial and education customers who need space now, not in six months.

For the third quarter of 2025, the Mobile Modular division saw rental revenues hit $83.2 million. 72.6% was the average fleet utilization for that quarter, showing they are actively deploying assets. To give you a sense of the pricing power supporting this flexibility, the average monthly revenue per unit on rent for Mobile Modular was $865 in Q3 2025. Back in Q1 2025, the rental fleet size for this segment was approximately 43,000 units.

Turnkey service offerings (Mobile Modular Plus) simplifying site setup

This is where McGrath RentCorp bundles the space with the necessary support, making the solution truly turnkey. You get the building, plus the site preparation and setup services, which saves the customer significant coordination headaches.

The growth in these services is a clear indicator of this value proposition resonating. In Q3 2025, Mobile Modular Plus revenues reached $9.7 million, a healthy increase year-over-year. Furthermore, Mobile Modular site-related services revenues were $15.6 million for the same period. For comparison, in Q2 2025, Mobile Modular Plus alone brought in $9.2 million.

Cost-effective alternative to equipment ownership via rental model

For many customers, renting avoids the large capital outlay and depreciation risk of owning specialized assets. McGrath RentCorp's overall financial health, supported by its rental model, underpins this value.

The company is projecting full-year 2025 total revenue between $935 million and $955 million, with an Adjusted EBITDA guidance range of $350 million to $357 million. This scale allows them to offer competitive rental rates. As of September 30, 2025, McGrath RentCorp had a trailing 12-month revenue of $931 million. Their financial discipline is evident in their leverage, with the funded debt to last 12 months adjusted EBITDA ratio standing at 1.58:1 at the end of Q3 2025. This suggests they manage the cost of capital effectively, which flows down to rental pricing.

Specialized, high-value electronic test equipment rental (TRS-RenTelco)

The TRS-RenTelco segment offers specialized, high-value electronic test equipment, which is expensive to buy and quickly becomes obsolete. Renting this equipment is a clear cost-saver for engineers and technicians.

This segment showed a strong rebound in Q3 2025, with rental revenues increasing by 9% year-over-year. Total revenues for TRS-RenTelco in Q3 2025 were $36.9 million, and the segment generated an adjusted EBITDA of $20.2 million. Their average utilization rate improved to 64.8% in Q3 2025, up from 57.3% a year earlier, and rental margins reached 43%. For context on the asset base, the Q1 2025 rental fleet for TRS-RenTelco was valued at $334 million.

Reliable, fast delivery and setup across North America

McGrath RentCorp operates across North America, which is where the majority of their revenues are generated. Reliability is measured by consistent pricing and deployment capability.

The company's ability to command higher rates on new contracts speaks to perceived reliability. For Q2 2025, the monthly revenue per unit on rent for new shipments over the last 12 months was $1,168, up 4% year-over-year. The company serves approximately 21,000 clients across its base. The focus on preparing available fleet, rather than immediately purchasing new assets, in Q3 2025, shows a commitment to deploying existing, ready-to-go assets quickly to meet demand.

Here is a quick look at the segment performance that supports these value propositions for the third quarter of 2025:

McGrath RentCorp (MGRC) - Canvas Business Model: Customer Relationships

You're looking at how McGrath RentCorp keeps its roughly 21,000 clients engaged across its three main segments as of late 2025. The approach is segmented, but the core is deep service integration, especially within the Mobile Modular business.

Dedicated direct sales force for large commercial and government accounts

For the TRS-RenTelco segment, customer acquisition relies on an outside sales force, supported by telemarketing, trade shows, and digital campaigns. A key component here is the knowledgeable inside sales engineering team, which works to match specific electronic test equipment solutions to the customer's precise requirements. This technical matching is a relationship-building step for short-term project needs or product evaluations.

Long-term rental contracts, especially in the education sector

McGrath RentCorp has a strategic focus on increasing the proportion of longer-term rental revenue contracts. The Mobile Modular segment, which is the company's largest and highest-growth area, heavily serves the education sector for temporary and permanent space needs in states like California, Texas, and Florida. While the exact percentage of revenue from long-term education contracts isn't public, the company's stated strategy points to this as a relationship anchor.

Most rental agreements in the Mobile Modular segment are operating leases that generally provide no purchase options, suggesting a focus on recurring rental income over immediate asset disposal.

High-touch service model for site-related services

The commitment to service is evident in the pricing power achieved through service offerings. For the Mobile Modular segment, rental-related services revenue grew 11% YoY in the second quarter of 2025. This service component is integral to the high-touch model, covering things like preventative maintenance and on-site support.

The value derived from these relationships and services is reflected in the unit economics. As of the second quarter of 2025, the Monthly Revenue Per Unit on Rent for the Total Fleet stood at $831, an 8% YoY increase. New shipments over the last 12 months showed even stronger pricing, with a Monthly Revenue Per Unit on Rent of $1,194, up 12% YoY. This indicates that new, deeper service integrations command a higher price.

Relationship-driven approach to foster repeat business

McGrath RentCorp emphasizes dedication to customer service, which management believes results in high levels of customer loyalty and repeat business, particularly within the Mobile Modular group. This focus on operational excellence-quick response, experienced assistance, and on-time delivery-is designed to secure ongoing contracts rather than one-off transactions.

Here's a quick look at the relationship-relevant performance indicators from the first half of 2025:

The company's ability to grow revenue per unit, even when overall fleet utilization dips slightly-for example, Mobile Modular utilization was 73.2% in Q2 2025-shows that strong customer relationships allow McGrath RentCorp to extract more value from its existing assets.

McGrath RentCorp (MGRC) - Canvas Business Model: Channels

McGrath RentCorp generates revenue through a combination of direct customer engagement and leveraging established infrastructure across North America.

The company's direct sales approach is supported by its physical footprint. McGrath RentCorp operates an extensive network of branches across the United States and Canada, ensuring timely delivery and on-site support for customers. As of late 2025, the company has 1,219 total employees supporting these operations. The entire business generates 99% of its revenues from the North American market.

The direct sales team and regional branch network are critical for the Mobile Modular segment, which remains the core business. For example, in the third quarter of 2025, Mobile Modular rental revenues increased by 2% year-over-year, driven by larger infrastructure projects. The company is actively expanding its coverage through strategic tuck-in acquisitions and growing its Mobile Modular Plus and site-related services initiatives.

Company websites serve as a primary digital touchpoint for product information and initiating the sales cycle, though specific website traffic or quote conversion statistics aren't publicly detailed. The overall sales revenue across the company saw a significant decrease in Q3 2025, falling 18% to $76.1 million. This decline was largely due to lower new equipment sales, which impacts the direct sales channel that handles equipment sales.

The Enviroplex manufacturing facility directly supports the modular classroom sales channel, particularly within the education market. In the first quarter of 2025, the Enviroplex business reported a strong quarter in new modular sales in the education market. This direct manufacturing-to-sale channel is distinct from the primary rental operations.

Third-party logistics are integrated, especially through the Mobile Modular segment's service offerings. This is reflected in the growth of rental related services, which increased 22% in Q1 2025 due to higher delivery and pick-up activities. By the third quarter of 2025, Mobile Modular rental related services revenues reached $44.5 million.

Here is a snapshot of the key financial metrics related to the revenue-generating channels as of the latest reported periods in 2025:

The company's channel strategy involves leveraging its existing fleet and service capabilities, as seen in the following operational highlights:

• The company has maintained its status as a Dividend Champion with 34 consecutive years of dividend increases.
• The Mobile Modular segment rental fleet was approximately 43,000 units valued at $1.415 billion (original acquisition cost) as of Q1 2025.
• The Portable Storage division rental fleet was approximately 42,000 units valued at $240 million as of Q1 2025.
• The TRS-RenTelco division rental fleet was approximately 22,000 units valued at $334 million as of Q1 2025.
• Management noted using off-rent inventory rather than investing in new product to manage the fleet efficiently.

McGrath RentCorp (MGRC) - Canvas Business Model: Customer Segments

You're looking at the core groups McGrath RentCorp serves, which directly map to its three primary operating divisions: Mobile Modular, Portable Storage, and TRS-RenTelco. As of late 2025, the company serves approximately 21,000 clients across North America. The Mobile Modular segment, which houses the education, commercial construction, and government facility customers, remains the largest revenue driver, accounting for 75% of total revenues in 2024. The overall business is showing resilience, with Trailing Twelve Month (TTM) revenue as of September 30, 2025, reaching $931 million USD.

The demand profile across these segments is mixed but trending positively in rental operations, which is the core of the business model. For the third quarter of 2025, rental operations revenues grew 4% overall, with each business showing positive year-over-year rental revenue growth, despite total company revenues being down 4% compared to Q3 2024.

Here is a breakdown of the key customer segments and their recent performance indicators:

• Education sector (K-12 schools, universities): A key driver within Mobile Modular, benefiting from funding tailwinds.
• Commercial and non-residential construction companies: A primary user of both Mobile Modular site offices and Portable Storage units.
• Government and municipal agencies: Utilize Mobile Modular for temporary facilities and offices.
• Technology, aerospace, and defense firms: The core customer base for the TRS-RenTelco segment.
• Industrial and energy sectors: Significant users of Portable Storage and Mobile Modular site offices.

The TRS-RenTelco segment, focused on electronic test equipment rental for technology, aerospace, and defense, was a standout performer in Q3 2025. This segment saw its rental revenues increase by 9% year-over-year, reaching $28.0 million for the quarter, with Adjusted EBITDA growing 7%. This growth suggests strong, near-term capital deployment or project activity within those high-tech and defense-related industries.

The Mobile Modular segment, which serves the construction, education, and government needs, showed its rental revenues increasing by 2% in Q3 2025. For context, this segment generated $131.9 million in revenues in Q1 2025 and saw its Q2 2025 total revenues hit $156 million. The Portable Storage segment, serving industrial and construction needs, saw its rental revenues grow by 1% in Q3 2025, marking its first year-over-year growth since Q1 2024, indicating market stabilization after a soft period.

To give you a clearer picture of the segment focus, based on 2024 revenue contribution, here's how the customer base maps to the divisions:

The full-year 2025 guidance, as updated in Q3, projects total revenue between $935 million and $955 million, with Adjusted EBITDA targeted between $350 million and $357 million. The company is definitely leaning on the strength of its rental fleet utilization across all customer types to meet these targets, especially given the 18% year-over-year decrease in sales revenues reported in Q3 2025.

Finance: draft 13-week cash view by Friday.

McGrath RentCorp (MGRC) - Canvas Business Model: Cost Structure

You're looking at the core expenses that drive McGrath RentCorp's operations, which are heavily weighted toward asset ownership and servicing. These costs are critical to watch, especially when utilization dips.

High fixed costs from fleet depreciation and maintenance are inherent to the rental business. Depreciation on the massive equipment fleet is a non-cash charge, but it represents the constant erosion of your primary asset's value. Maintenance is the necessary cash outlay to keep that fleet earning.

Significant interest expense on net borrowings is a major cash outflow you must service. At the end of Q3 2025, McGrath RentCorp had $552 million outstanding in net borrowings. This debt level directly impacts profitability through interest payments.

Selling and administrative expenses (SG&A) are also a key area. For the third quarter of 2025, these expenses were reported at $52.5 million. This figure included investments in broader sales coverage to support future growth, which ties directly into your labor costs.

Labor costs for field service technicians and sales coverage are embedded within SG&A and Cost of Revenue. The increase in Q3 2025 SG&A was partly due to operating with broader sales coverage to support long-term business growth. You're paying people to service the fleet and find new rentals.

Capital expenditures for new rental equipment are managed based on demand signals. For the full year 2025, McGrath RentCorp guided Gross rental equipment capital expenditures to be between $115 million and $125 million. This is a strategic lever; they reduced year-to-date purchases to $92 million as of Q3 2025, focusing on using existing fleet inventory first.

Here's a quick look at some of the key financial figures impacting the cost side from the Q3 2025 results:

You can see the cost of capital in action:

• Interest expense for Q3 2025 was $8.2 million.
• This was a decrease of $4.5 million from the prior year due to lower rates and debt.
• Funded debt to last twelve months' adjusted EBITDA stood at 1.58x as of Q3 2025.

The management team is actively managing CapEx based on current fleet levels. They noted that lower year-to-date purchases of $92 million were consistent with lower fleet utilization and a plan to use available fleet to satisfy orders. If onboarding takes 14+ days, churn risk rises, which means higher reconditioning and repositioning costs for the fleet.

McGrath RentCorp (MGRC) - Canvas Business Model: Revenue Streams

McGrath RentCorp's revenue generation is fundamentally built around its asset-heavy rental fleet, supplemented by equipment sales and value-added services. This model provides recurring revenue stability, which is the core of the business.

The primary engine remains the leasing of equipment across its three main segments. For the first quarter of 2025, the company reported that its primary revenue from rental operations reached $154.0 million, representing a 3% year-over-year growth, showing the underlying strength in asset utilization despite some market softness. This recurring rental income is the most predictable component of the revenue mix.

A significant secondary stream is the monetization of the asset base through outright sales. In Q1 2025, sales of new and used rental equipment contributed $38.9 million to the top line, marking an 11% increase over the prior year's first quarter. This stream is more cyclical, tied to new equipment investment decisions by customers and the company's own fleet management strategy.

Value-added services are an increasingly important area for margin enhancement. Specifically within the Mobile Modular division, revenue from rental-related services, such as the Mobile Modular Plus offering, saw growth of 12% in the first half of 2025. This focus on services helps to increase the overall revenue per unit on rent.

The company's near-term financial expectations for the full fiscal year 2025 reflect a cautiously optimistic view based on year-to-date performance and current demand signals. McGrath RentCorp has issued guidance for its full-year 2025 Total Revenue to be in the range of $935 million to $955 million. To complement this revenue outlook, the company projects its Adjusted EBITDA guidance for 2025 to fall between $350 million to $357 million.

Here's a quick look at how the key revenue components stacked up in Q1 2025 and the full-year targets you need to keep an eye on:

The revenue streams are further detailed by the underlying business activities that generate them. You should track the performance of these distinct areas:

• Rental revenue growth across all three rental businesses.
• Progress in expanding Mobile Modular Plus and site-related services.
• The impact of pricing optimization on revenue per unit.
• The performance of the Portable Storage division against softer construction markets.