TRANSACTION HIGHLIGHTS:<\/span><\/b><\/p>\n TRANSACTION OVERVIEW:<\/span><\/b><\/p>\n McGrath RentCorp<\/b> (\u201cMcGrath\u201d or the \u201cCompany\u201d) (Nasdaq: MGRC), a leading business-to-business rental company in North America, today announced that it has signed and closed a definitive agreement under which it acquired Vesta Modular (\u201cVesta\u201d) a portfolio company of Kinderhook Industries (\u201cKinderhook\u201d), for a cash purchase price of $400 million, subject to certain adjustments, and sold Adler Tank Rentals (\u201cAdler\u201d) to Ironclad Environmental Solutions (\u201cIronclad\u201d), a Kinderhook portfolio company, for a cash sale price of $265 million, subject to certain adjustments. Both transactions were completed simultaneously on February 1, 2023.\n<\/p>\n \nFounded in 2014 and headquartered in Southfield, MI, Vesta is a leading provider of temporary and permanent modular space solutions. The company operates two divisions \u2013 (i) Modular Space Leasing whereby it leases units from its owned fleet of approximately 6,000 units to customers across a diverse range of end markets and applications, and (ii) Modular Construction Services whereby it facilitates the design, manufacturing, logistics, and installation of modular buildings. Vesta\u2019s core end markets include education, industrial, construction, government, municipalities, and retail sectors. Vesta serves over 900 customers. In addition to its Southfield, MI headquarters, it operates strategically-located branches in a number of the nation\u2019s fastest growing markets, such as Atlanta, Houston, and Miami.\n<\/p>\n \nAs of December 31, 2022 estimated, on a trailing 12-month basis, Vesta generated $40 million of EBITDA on $129 million of total revenue. As of December 31, 2022, Vesta\u2019s rental fleet consisted of approximately 6,000 units at an original cost of approximately $220 million. The transaction implies a multiple of 7.7x FY2022 EBITDA, including run-rate synergies and the present value of tax benefits expected from past net operating losses. McGrath anticipates realizing $8 million of annual run-rate synergies by 2024 and $30 million of value from net operating losses. The final purchase price is subject to customary adjustments.\n<\/p>\n \n\u201cGrowing Mobile Modular is the strategic focus area for our Company, and the addition of Vesta\u2019s portfolio accelerates our expansion of the business.\u201d said Joe Hanna, President and CEO of McGrath. \u201cWe are now able to offer our customers access to an expanded product line across more geographies than ever before. We are confident we will be able to leverage our combined sales and operational resources by seamlessly integrating Vesta in order to grow the new, larger scaled McGrath modular business together. In addition, Vesta has a dedicated and experienced team and we are excited to welcome these new team members into the McGrath family.\u201d\n<\/p>\n \n\u201cWe are grateful for the successful partnership we forged with Kinderhook over the past two years and are proud of what we have accomplished during that period,\u201d said Dan McMurtrie, Co-Founder and Chief Executive Officer of Vesta. \u201cMcGrath is a highly-respected leader in our sector with a tremendous culture and core values that align with those of Vesta. We believe that our employees will thrive under their leadership.\u201d\n<\/p>\n \nFounded in 1998 in Newark, NJ, Adler is a rental provider of liquid and solid containment solutions for storage of hazardous and non-hazardous liquids. Adler rents temporary storage tanks and containers used in energy, environmental, industrial and construction applications. Adler operates from branches that serve 27 states across the U.S. The sale price of $265 million implies a multiple of 7.1x FY2022 estimated Adjusted EBITDA. The final sale price is subject to customary adjustments.\n<\/p>\n \nAs a result of the two transactions, McGrath expects a net cash outflow of approximately $165 million, inclusive of estimated $30 million of reimbursable rental equipment capital expenditures.\n<\/p>\n \nJoe Hanna also commented, \u201cRegarding the sale of Adler, I cannot say enough good things about the team and I know being part of Ironclad will open up additional opportunities for growth. The team has done a marvelous job running the business over the years and I want to extend a thank you to Stuart Porter and the entire Adler team for their exceptional work and dedication as a part of McGrath. We expect nothing but success for them under their new ownership structure.\u201d\n<\/p>\n STRATEGIC BENEFITS FROM THE TRANSACTION:<\/span><\/b><\/p>\n TRANSACTION FINANCING<\/span><\/b><\/p>\n \nThe transaction was funded through the Company\u2019s existing revolving credit facility.\n<\/p>\n ADVISORS:<\/span><\/b><\/p>\n \nGoldman Sachs & Co. LLC acted as McGrath RentCorp\u2019s exclusive financial advisor and Morrison & Foerster LLP acted as McGrath RentCorp\u2019s legal advisor in the transactions. Oppenheimer & Co. acted as Vesta and Ironclad\u2019s exclusive financial advisor. Kirkland & Ellis acted as Vesta and Ironclad\u2019s legal advisor in the transactions.\n<\/p>\n Conference Call Note:<\/span><\/b><\/p>\n \nMcGrath RentCorp will host a conference call tomorrow, February 2, 2023 at 8:00 a.m. Eastern Time (5:00 a.m. Pacific Time) to discuss the transaction. To participate in the teleconference, dial 1-800-267-6316 (in the U.S.), or 1-203-518-9783 (outside the U.S.), or to listen only, access the simultaneous webcast at the investor relations section of the Company\u2019s website at https:\/\/investors.mgrc.com\/<\/a>. A replay will be available for 7 days following the call by dialing 1-888-269-5331 (in the U.S.), or 1-402-220-7327 (outside the U.S.). In addition, a live audio webcast and replay of the call may be found in the investor relations section of the Company\u2019s website at https:\/\/investors.mgrc.com\/events-and-presentations<\/a>.\n<\/p>\n \nIn connection with its call, the Company has provided information pertaining to the transactions in presentation format on its website, Events and Presentations | McGrath (mgrc.com)<\/a>.\n<\/p>\n ABOUT MCGRATH:<\/b><\/p>\n McGrath RentCorp<\/b> (Nasdaq: MGRC) is a leading business-to-business rental company in North America with a strong record of profitable business growth. Founded in 1979, McGrath\u2019s operations are centered on modular solutions through its Mobile Modular<\/b> and Mobile Modular Portable Storage <\/b>businesses. In addition, its TRS-RenTelco<\/b>business offers electronic test equipment rental solutions. The Company\u2019s rental product offerings and services are part of the circular supply economy, helping customers work more efficiently, and sustainably manage their environmental footprint. With over 40 years of experience, McGrath\u2019s success is driven by a focus on exceptional customer experiences. This focus has underpinned the Company\u2019s long-term financial success and supported over 30 consecutive years of annual dividend increases to shareholders, a rare distinction among publicly listed companies.\n<\/p>\n \nHeadquartered in Livermore, California. Additional information about McGrath and its businesses is available at mgrc.com<\/a> and investors.mgrc.com<\/a>.\n<\/p>\n ABOUT VESTA:<\/b><\/p>\n \nVesta Modular \u2013 https:\/\/vestamodular.com\/<\/a><\/p>\n SAFE HARBOR<\/b><\/p>\n \nThis statement contains forward-looking statements within the meaning of Section 27A of the Securities Act, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These forward-looking statements include: (1) the Vesta acquisition accelerating growth and profitability in the core modular business, including expanding geographic coverage and density, facilitating reach to new customers, and increasing proportion of long-term contracts, (2) statements under the section titled \u201cStrategic Benefits from the Transaction\u201d, including anticipated accretion from both transactions in 2024 with ROIC exceeding cost of capital beyond 2024, and run-rate synergies of $8 million per year, (3) anticipated $30 million of value from Vesta\u2019s net operating losses, (4) transaction multiples based on 2022 estimated EBITDA of Vesta and Adler, and (5) McGrath retaining financial flexibility for shareholder return and tuck-in acquisitions. These forward-looking statements also can be identified by terminology such as \u201canticipates,\u201d \u201cbelieves,\u201d \u201ccontinues,\u201d \u201ccould,\u201d \u201cestimates,\u201d \u201cexpects,\u201d \u201cintends,\u201d \u201cmay,\u201d \u201cplan,\u201d \u201cpredict,\u201d \u201cproject,\u201d or \u201cwill,\u201d or the negative of these terms.\n<\/p>\n \nThese forward-looking statements are not guarantees of future performance and are subject to significant risks and uncertainties that could cause our actual results to differ materially from those projected, including (a) problems arising to forestall the successful integration of the Vesta business, including the potential loss of any key employees of Vesta; (b) incurrence of unexpected costs, including exposure to any unrecorded liabilities or unidentified issues that the Company failed to discover during due diligence or that are not covered by insurance and (c) potential unfavorable accounting treatment and unexpected increases in taxes associated with the transactions. Other important factors that could cause actual results to differ materially from the Company\u2019s expectations are disclosed under \u201cRisk Factors\u201d in the Company\u2019s Form 10-K for 2021 and other SEC filings.\n<\/p>\n \nThese forward-looking statements speak only as of the date hereof. Except as otherwise required by law, we are under no duty to update or revise any of the forward-looking statements after the date of this presentation, whether as a result of new information, future events or otherwise.\n<\/p>\n \nThis press release is not intended to be a recommendation to buy, sell or hold securities and does not constitute an offer for the sale of, or the solicitation of an offer to buy securities in any jurisdiction. Any such offer will only be made by means of a prospectus or offering memorandum, and in compliance with applicable securities laws.\n<\/p>\n\n
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