LIVERMORE, Calif.–(BUSINESS WIRE)–McGrath RentCorp today announced that it has signed a definitive agreement under which it will acquire Design Space Modular Buildings PNW, LP, for a cash purchase price of $260 million, subject to certain adjustments. The transaction is expected to be accretive to EPS and free cash flow upon close.
Design Space is a leading modular building and portable storage provider in the Western U.S. Its network of 15 branches and over 100 employees serves diverse end markets, including construction, government, education and commercial.
As of December 31, 2020, on a trailing 12-month basis, Design Space generated $32 million of EBITDA on $81 million of total revenue. As of March 31, 2021, Design Space’s rental fleet consisted of approximately 6,400 units at an original cost of approximately $140 million.
TRANSACTION HIGHLIGHTS:
- Expands geographic coverage of McGrath RentCorp’s Mobile Modular division across the Western U.S. with an immediate addition of 15 established branches across 8 states.
- Joins together Design Space’s and Mobile Modular’s shared commitment to superior customer service and high fleet quality.
- Positions for longer term revenue growth synergies from combined sales resources and new fleet capital investments in growth markets.
- Creates opportunities for operational cost savings from optimization of combined fleet in California.
- The purchase price represents a multiple of 8.1 times trailing 12-month EBITDA.
- McGrath RentCorp expects to fund the transaction from existing capacity under its revolving credit facility.
- The transaction is expected to close in the second quarter of 2021.
“The acquisition of Design Space is highly complementary to our modular building rental business,” said Joe Hanna President and CEO of McGrath RentCorp. “This strategic initiative accelerates our expansion into attractive new geographies. With our available capital and combined sales and operational resources, we look forward to building on Design Space’s success and achieving future growth together. Design Space has a strong, dedicated and experienced team. We are excited about welcoming our new team members as an important part of our future.”
ADVISORS:
Kirkland & Ellis LLP acted as McGrath RentCorp’s legal advisor in the transaction, and Jackson Walker LLP acted as Design Space’s legal advisor.
CONFERENCE CALL NOTE:
McGrath RentCorp will host a conference call tomorrow, May 14, 2021, at 8:00 a.m. Eastern Time (5:00 a.m. Pacific Time) to discuss the Design Space acquisition. To participate in the teleconference, dial 1-844-707-0666 (in the U.S.), or 1-703-639-1220 (outside the U.S.), or to listen only, access the simultaneous webcast at the investor relations section of the Company’s website at https://investors.mgrc.com/. A replay will be available for 7 days following the call by dialing 1-855-859-2056 (in the U.S.), or 1-404-537-3406 (outside the U.S.). The pass code for the conference call replay is 3693916. In addition, a live audio webcast and replay of the call may be found in the investor relations section of the Company’s website at https://investors.mgrc.com/events-and-presentations.
ABOUT MCGRATH RENTCORP
Founded in 1979, McGrath RentCorp is a diversified business-to-business rental company providing modular buildings, electronic test equipment, portable storage and tank containment solutions across the United States and other select North American regions. The Company’s rental operations consist of four divisions: Mobile Modular rents and sells modular buildings to fulfill customers’ temporary and permanent classroom and office space needs; TRS-RenTelco rents and sells electronic test equipment; Adler Tank Rentals rents and sells containment solutions for hazardous and nonhazardous liquids and solids; and Mobile Modular Portable Storage provides portable storage rental solutions. For more information on McGrath RentCorp and its operating units, please visit our websites:
Corporate – www.mgrc.com
Modular Buildings – www.mobilemodular.com
Electronic Test Equipment – www.trsrentelco.com
Tanks and Boxes – www.adlertankrentals.com
Portable Storage – www.mobilemodularcontainers.com
School Facilities Manufacturing – www.enviroplex.com
ABOUT DESIGN SPACE
Design Space – www.designspacemodular.com
Contacts
Keith E. Pratt
EVP & Chief Financial Officer
925-606-9200
