Shares of McGrath RentCorp (MGRC) plummeted 6.94% in pre-market trading on Friday following the release of the company's third quarter 2025 earnings report. The significant drop reflects investor concerns over declining revenues and profitability across key segments of the business.
The equipment rental and leasing company reported a 4% decrease in total revenues to $256 million for Q3 2025, while adjusted EBITDA fell 7% to $96.5 million. The Mobile Modular segment, a core part of McGrath's business, saw total revenues decline 5% to $181.5 million, primarily due to a 21% drop in sales revenues, particularly in new equipment sales.
Despite some positive trends, including a 2% increase in Mobile Modular rental revenues and strong performance in the TRS-RenTelco segment, the overall results fell short of investor expectations. The company cited softer demand conditions in certain markets as a contributing factor to the weaker performance.
However, McGrath's management highlighted some encouraging signs for future growth, including positive developments in education funding and infrastructure projects. CEO Joseph F. Hanna noted, "California passed a $10 billion facilities bond. Texas passed another $8 billion in facilities bond... There's literally billions of dollars that have been passed at a local level that are waiting to be dispersed and used on projects."
While the company remains optimistic about its long-term prospects, the immediate reaction from investors suggests concerns about near-term challenges and the potential impact on McGrath's financial performance in the coming quarters.
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