MGRC - Earnings call transcript Q1 2019

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the McGrath RentCorp First Quarter 2019 Conference Call. At this time, all conference participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions]. recorded April being XXXX. is conference today XX, Tuesday This

facts are that that management well statements significant strategies, cause forward-looking to are Before Reform projected. filings. within Act Form company's historical regarding Securities note as These Risk guarantees including that of cause from involve targets. XXXX the matters other meaning not or that forward-looking and results actual the XX-K company's of the prospects those the and performance of of that we not differ begin, under outlook Litigation materially today relating Factors materially total the the risk could excitations, in could future company to Important SEC factors company as Private from uncertainties company's profit the statements statements discussing and will statements statements XXXX, results disclosed to are our expectations be our operating actual differ are

Forward-looking only as no date by any otherwise the statements are as forward-looking law, assume update to obligation made hereof. required we Except statements. of

In the the the release addition the Form issued release XX-Q on Form and SEC X-K the quarter. earnings filed also to for press company the with today,

sir. Speaking and now Financial ahead, Officer. Mr. Chief turn to today I the Executive be Hanna, Keith will Go Hanna. will Joe Officer; Pratt, Chief call over

Joe Hanna

a all The I for will XXXX call good review. Keith are Liz. thank the business quarter us detail provide then in and on the and you today's start afternoon, to start we the Thank is will is his call. year Good some joining our and firing off you, comments for cylinders. with news strong performance, first on financial additional on

colder-than-usual number the sets profit. communications; a testing revenue Activity was factors: weather year, base business a very growth positive. challenging of school applications. in first and to demand The electronic and by but overall purpose healthy, for general pace from bookings; factor realized for despite this XX% operating January, was be district in a customer was year and improvement influenced can to the XX% Company-wide, rental we our construction; quarter commercial

We are income the in due XX% Modular, placing spending XX%. facilities very to We Mobile we equipment unfolded. for by than quarter, quarter revenues in how and our At districts grew rental ready with usual. by part pleased the operating school orders earlier increased to production

line orders processes California, Some nicely. bookings approval Mid-Atlantic. the faster and also Accordingly, projects and shipping right billing commercial away some and rental state the education in projects are Florida moved through and we both the materialized season. local planned and equipment for Sales on than in put earlier

rental Portable with business continues growth quarter. of Our to Storage revenue first the traction in XX% gain

earnest, going new continue equipment branch customers. demand to both new high, Rental grew plan X open rent locations general with are operating X%. Our buying in and TRS-RenTelco, to general out is of this away. and network well efforts purpose as Greenfield equipment build communications our right are demand much year. for as on of purpose seeing income increased At to we and Utilization meet revenues XX% we the we

the significant will install society the and receives network been to the increased targets increase technology. provide have bandwidth on been has XG also equipment with new as carriers has a in internal of information Internet. in management and profound There how we're right effect cycle. to a inventory the XG meeting technology sell will effective, out fleet the at activity from Our are beginning times

in begun field. the multi-pronged to is and with work result, be As to it deployment the R&D now expect a has we and multiyear labs a that moving

are we downstream customer gas grew to with upstream business oil and demand well and effectively, is At in from monitoring Rental customers X% Tank developments Adler key demands and closely. supplier XX%. relationships profit respond TRS-RenTelco to increased markets. quickly revenues both positioned growth and Our Rentals, and continued operating

RentCorp. more force utilization selectively at profitable hope we utilization improvements we first March the and a have celebrated is transactions by XXth quarter the of our healthy quarter X% believe as to of XX%, industry and On the We more improved realized that quarter the working strategy footing, this of Our XX, rates in since best the progresses. the XXXX. as the over directing is sales end anniversary on we further was year McGrath for

is Bob the As early culture ago, It McGrath jumps the Jaon still I they company's days environment clear and XXth when created to forefront. about McGrath in our the started is today. years and RentCorp, well the and alive company think success that defined anniversary, our XX

a customer monitor our in feedback receive and committed commitment to surveys enduring This shows ratings of core is a every everyday Feedback exceptional our has aspect is we from future. One an believe to communications reviews I the experiences The customer. will direct team closely. interaction. it values the something relentless continue with very consistently online, and net been of score customer we and promoter important serving success, and

deployed Our and investments. focused drive continues performance remain as to from an on from generating improved financial our strong fleet returns we new

shareholders on has and to customers deliver the on we'll our glad to anniversary a this year started note, to be are working year. We throughout and commitments hard good see

call through turn review. So now, you let over our me Keith, take will to financial who the

Keith Pratt

Thank Joe. you,

quarter increase $XX.X gross to increase increased increased total and XX% million quarter on of same from revenues by company's for driven in $XX.X $XXX million, to million $X.X XX% for million per XXXX, million increased and For a sales. the period increase gross diluted from the first the $X.X profit Net operating $X.XX profit share The earnings $X.XX. to rental income $XXX.X in million from XXXX. in was from revenues a XX% XX% profit

for and be across higher Rental on used to well our and equipment our new healthy business. markets preparation cost commercial other as services for education continued direct Equipment in on revenues $X.X average revenues million Sales Storage XX%, rent. sales and by the growth increased or driven rental rents. to sales. XX% X% Mobile an revenue higher and the Average average improvement fleet Rental Rental in revenues. million to and higher decreased operations XX.X%. material year decreased $XX.X $XX.X XX% primarily quarter Portable million XX% and Rental rental higher million was for margins increase as million. costs revenues total rent. of earlier XX% million from to performance increased rental equipment increased on sales to costs review increased from XX%. increased modular a quarter communications increase utilization Modular million, average a to higher direct rental higher revenues. rental, The XX% which first $XX or equipment rental general education XX%. for gross quarter a respectively. million. of costs. revenues division $X.X of the let's quarter rental from volumes attributable $XX.X driven support demand workload by The first X% markets and other profit on rents. $XX.X Now in increased rental was in X% rates $X.X and XX% compared of by due to XXXX XX% equipment to million ago, revenues to labor from result was for in or increased rental to in or Average result rental and the rental-related Rental profit a XX.X% to revenue X%, Test gross combined purpose XX% or XXXX. was quarter our The primarily the higher $XXX combined revenues X% increased on higher margin on increased was lower and increase total TRS-RenTelco on margins XX% equipment

of result size as favorable natural from year-over-year, Adler's to $X.X was mix. total rates XX.X% the increases up equipment rental opportunities. market for a rental X The million, on for to quarter XX% the Rental of purpose and fleet rates which average were Rentals X% product quarter in of was while total Rental better decreased revenue were higher our revenues revenues was rental result growth lower vertical average utilization was test XX% a Upstream XX.X%. well the gas from markets. Tank of for or Adler an $XX.X $XX oil increased continue on for better only rental rent. the electronics million million. combined with rents. offset higher increase revenues, accounted X% gross primarily We by X% in to average fleet. our equipment invest utilization X% existing rental driven focus sales higher The Average to was continue pricing increased general quarter partly and higher Average for increase equipment X%, rental-related increased on growth $XXX XX%. as on we margins revenues. rental, which revenues, profit rental X million revenues broad-based services a by in XX% of to

review, to total sales quarter first ago. year the fluctuate and with basis. revenues timing review or Selling $XX.X a from XXXX. administrative Now increased Therefore, expect earlier half be quarter total customer comparable sales on higher a average my sales in ago. the expenses currently of sales $X.X salaries costs. debt total to remainder second Interest company quarter-to-quarter the to XXXX was compared X% given At of this complete, requirements. Timing of levels. million net in of Higher the to we company same revenues be from $XX.X lower partly comments first and $XX.X period XXXX lower first Total million to interest expect $X.X the by employee the for revenues average and a higher increased million offset can million. will depending sales this rates revenues were million due quarter benefit for on to division equipment primarily year-to-year, we expense year point, revenues,

of for The rate first of which tax quarter provision taxes XXXX. an was based to quarter first XXXX XX.X%, the effective income on was comparable

a of Dividend were shareholders at year quarter EBITDA actual credit, comparable was million to were the additional lines XXXX million our X.XX:X. first deferred its debt $X.X provided the due capacity The and to XXXX, to XXXX. million. purchases quarter-end, of sheet to had million like $X.X increase under Property, ago. income last the purchases Mobile at to XX months the flow invested and ratio would income the and to equipment purchases decreased $XXX.X million attributable $XXX.X $XX.X balance We million, quarter cash $XX.X an the review period Modular. Next, compared cash by from equipment plant million operations, $XX.X XXXX primarily Net of was for first activities I in operating at $XX.X increase rental compared other higher for primarily XXXX. XX% same $X.X was changes. million of adjusted to to improved highlights. payments Net million to company to the At borrow funded from of end million, borrowings $XXX.X and end an

First increased adjusted quarter XXXX XXXX XXXX. of compared adjusted to EBITDA period first the was EBITDA $XX.X in million margin Consolidated the quarters XX% XXXX. XX% and in same to

Our a definition quarter. EBITDA in to and income our of press reconciliation of release included for the adjusted are adjusted EBITDA net

our reconfirm prepared and financial to company that the you operating Liz, the outlook. questions. between turning XXXX increase XXXX quarterly may lines now XX% concludes full the over our for for year XXXX open We X% Finally, expectation remarks profit on will results. our total That results.

Operator

Schneeberger [Operator Instructions] Our with comes Scott of from line Oppenheimer. question first the

Scott Schneeberger

to a I'm a Certainly year. of maintenance start start the to going bit with a off question. strong

the and guidance ramifications a curious, difficult predict. those to are mentioned I that's year-over-year second in half? in first quarter be going not. assume bit year, large you this quarter. on strong Keith, year? lower first a for little sales, didn't about you're then the quarter net so I'm how is that to And of just a the something change the first how net Or sales thinking in of But little in X I particularly it's was full going out bit to it, flat? light to Now, see know equipment I it just there in any

Keith Pratt

happy and there. more sure, add Yes, try clarity to Scott,

million XX% million we were is, a with sales. increase. first Really company up quarter comment year $XX for $XX first that's ago, a results from the think strong the delighted overall, I

strong. the and customer the projects, was modular side the related modular It's of of all driven on So about commented periodically timing Most sales very on, the to talk sales new this, is the to by increase side. is particularly business. equipment The customer. all related we on I of that thing

we as is at start year year we this strong at likely how we to had a when So don't see year. certainly quarter to point, be look the quarter, high at second will playing it what we in When second a we think the as occur look very the ago. out, today the

half, to at be in company And ago. sales is they will mentioned first to the in similar question then they full a Our think XXXX mind, sales your comparable total had we were and year February full this about what answer were XXXX, year, point change strong full and outlook. expectation will for We the in no year the be exceptionally XXXX. even we to prior that year in sales in keep what our

sales at So pipeline is very kind prepared remarks, And a for good. in looks as XXXX of of that level in very Joe some the business opportunity his strong mentioned keeping for performance. overall of

Scott Schneeberger

good Excellent. such And with then just, it because start. a certainly it feels conservative

there to and to rental pricing Moving you over what strong feel out could obtain? is you speak environment? there, the left very And to modular, a start

Joe Hanna

And realized good be able improvement across in of not the We done. rates the and to board on basis. still raise Scott, regions Joe. have in. We've operate year-over-year Pricing rate Sure, is a room good. been we to that we're environment's most this

So there. there room is still

Scott Schneeberger

I'm more, remarks. going is than the you XG little you seeing is about as a the to last talking research your far field. in and obviously and out McGrath this it's could TRS your like touched elaborate you in more to bit, significant, next, call, quarter, on as a be the balanced was in going prepared It it Joe, sounded please? were room commentary little how it in bit

Joe Hanna

was on and an opportunity real we we've seen date This there XG ship general XG the connections looking a it. be tower there happening to stage that's set been lot wireless we'll beyond been And early purpose hasn't smartphone the and that things cycle. Sure, to lab, this in than a much towers. Testing in field of XG they're XG. times our business. in it's yet upgrades I with the technology XG faster that been we let for innings this of we're few me for of about XG. at think, to in case, we going more is need XG. work to the on and how that'll the labs, all learn go saw devices Much Testing, mean has positive we're for the about is that hopefully There's how calling XXX for the unfold. development, work have will fiber, of say for significant a and in still things just a and than going

will devices Internet and that hasn't invented taken that So of the place there lab. equipment and is even take been going the to Things in of yet lot that's of advantage be a

bit explains a the in see little lab of So in as XG and it a business we field. future unfolding balance this for us that Hopefully the more opportunity clearly.

Scott Schneeberger

And I capacity helpful. That's also good you sounds your rate industry I then believe Adler, the going it good. bit one but visibility if interesting there. ask serve, Utilization end and is it Could That's flattish that's I'll an there. In a over. mind more, like just markets are on I'll how well horn going things year-over-year, turn the little to conditions? you dynamic then, Because wouldn't you that? around across speak saw.

Joe Hanna

point, about but capacity, at wanted It's improving from it industry that. mean, ours very that we is to our utilization where and Sure, this is I improving also. we're not seeing improving be competitors and is happy we're

verticals our healthier that there really so X So X was grew strength saw we the on also and are serve we regions to very a was all From of think gas that. that. in and were about happy year-over-year a regional ago, that basis, industry the perspective, see And we and of than And that glad a oil actually year demand we're both picture strength, is it growing. we and very was the X upstream downstream. of

recap kind that's brief a So you. of for

Keith Pratt

was very quarter than period a slightly, if for compared higher add, was ago was just for nicely at the to the have XX.X%. and end while average down up quarter. utilization year the Scott, And I Adler's average utilization That on that we did could

Scott Schneeberger

that. the on Kieth, up improving It guys quite industry is like you following there. and just disciplined and price seems are on

should point? in forward, you is aligning stating operating not your we metrics comfortable that the going that So at all positive? segment anticipate Or something look feel to to this

Keith Pratt

this challenge Yes, can think and on our business, transactions, the Scott, every shorter similar electronics transactions, business, shorter rental the I months. it's term few lot change to with a

in market overall then do sense that teams and a But the got wave you've our well think business. apply competitor context. general of disciplines of that again, ride and behavior conditions I going So the we're try to and pursuit in the of

industry the we working is demand on, there, things already the market if the if own. equipment of looking So pricing, disciplined to we'll working is more on been the utilize healthy, keep we've

Operator

next line of Riddick comes Our with the question from Marc Sidoti.

Marc Riddick

the I color seen the there. comments education the how And bit a spend little there a on time of I was visibility? maybe if a locals it's that of the the us wondering benefit could were past. of, you've maybe about And what little the, maybe in seen a for make made and And you've little of ahead order you've patterns a, sort that do And if might more you sense being what wondering was the get little could that you on from past? been anything in around give ahead where that? you you was more get

Joe Hanna

been that's and been school Sure. and, the into level and available quite made bit Well, state all, a money market districts. for put there's bond of of local first on a

districts, we their school projects timing release of ready the of, the were can actually that just earlier some funds those the what that so, years. vary, And they're than particular which and with of are and to in customers this of through of year, some deal we're ready districts is seeing getting most some the other

sometimes and the remarks, depends we later. Florida just it were we earlier, school California, districts Most it's my but in of strength and in I so also was prepared And as said Mid-Atlantic, also saw it's sometimes saw our up.

we're very the earlier and So on it that, bill it line about to pleased earlier, not equipment ship happy put but and too. we're only

Marc Riddick

though damage? seems way I'm to to, part tell Or, there not, Okay. strength whether a because you was demand maybe, prior was something it beneficial of was to then you is related aware? wondering sort I that's curious that might something And were you, and I'm and not touch if if if could I'm sure, weather-related that as been for to that have that of that as on any you

Joe Hanna

some we items Sure, was advantage past, weather-related in that in and QX. did of the take mostly

the revenues that So rental in case. small was impact to our

Marc Riddick

of then over looking of at a And you so? view if wondering Okay. could you geographic some was give or on touched locations, new of that's advanced if couple us little expansion Or the quarters and I of a opportunities couple maybe maybe last you a on, sort may see? that longer-term bit

Joe Hanna

business analyze that future, able mentioned of we plans and to We or there be actually in number this was this operate Sure. on markets be year. X a to Storage. see the we opportunities point And The for beyond today. in nothing the markets we've at Portable to we're, firm be select for able but to that got basis, that, room do mentioned the and expand locations expansion, locations we'll that's, looking we're always opening I an annual for we

Marc Riddick

Storage Okay. the I'm is Or me I the operations in that Greenfield, Portable markets this this other before, areas? have missed sorry? already if you expansions And but in forgive the that's in

Joe Hanna

be will These Greenfield.

Operator

from of comes Berenberg. with line England question next Our the Sam

Sam England

for couple a me. Just

how allocation year? on first to the was thinking this was I it just expand fleet the you in divisions side, over cash XXXX? of obviously about wondering you're do a capital for you'll Which of The the rest think so the quarter rest one, look strong

Keith Pratt

and strong from profitability definitely by we highlight Yes, operating the driven very flow is the cash Sam. year Strong the started as business. a

from CapEx If criteria. and on some in million. the market thing quarter through in look first tuck-ins at. spent our as out the for on focus well. year That's a $XX see in on discussed continue call we of opportunities good opportunities for up our good we opportunities ago, that investment piece million February. reflecting any modular as M&A a organic on be you business we That's business. our was a that radar meet if spend, small And the front particularly the conditions healthy, that we really CapEx at there's details fair us. dividend, in that's are look keep the If nicely obviously, will that $XX eye uptick we our for up, to price, always And or the business first a the the We our always

rest for the priorities, continue remain those So that and the we'll with of year.

Sam England

the was Then elaborate looking the drove the you Great. I Modular heard about bit already. just the Mobile we one wondering that from obviously was business a next if could segments on Which just aside at education? more growth

Joe Hanna

on government, Sure, projects different are commercial the headquarters growth number infrastructure in that's, the sectors that. space we're and and of expansion a lot private needs things new place, there's taking there's like for buildings of that side corporate industry industry, expansion and of a private seeing business,

regions Petrochem Yes to which the that that we in let been And Gulf also, all business, also of operate virtually our I seeing growth strong also So the out mean, has across coast. I in the in. want country we're too,

Keith Pratt

also I'd Sam, add the mix. into And

modular of As not you mix. lift compared the a no, our a And product a gives recall late numbers offering us year last ago. module blast-resistant added to in year, and bit the included we to that's little

Sam England

and or increased admin on obviously selling last you'd the one side, selling a one, then TRS. administrative small there mentioned the the was And expenses et to? on looks was expense that it cetera, salaries anything you higher was a, that, It there an just TRS some in bit Great. like a and of just point benefits, and and Okay. drove else uptick

Keith Pratt

Yes, slightly, I up think.

cost factor as across we with overhead be allocated combined customary corporate divisions. some be can drove number. But there and benefit the allocate expenses a health that type well, this that the increases corporate can As

Operator

Mr. [Operator at the for further in like I'd Instructions] back call I'm showing no now queue to Hanna remarks. time. this questions closing to turn

Joe Hanna

I'd speaking meeting for to We for our late shareholders again with our company. annual in in us review July our XXXX our thank continuing you today and like to forward second look in results. your during on call everyone joining and interest to quarter June

Operator

Ladies and gentlemen, your participation and may thank concludes conference. in day. now the for Everyone, a today's you This program, disconnect. great you have

McGrath RentCorp (MGRC) 6 May 192019 Q1 Earnings call transcript