MGRC - Earnings call transcript Q3 2020

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the McGrath RentCorp Third Quarter 2020 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] This conference call is being recorded today, Thursday, October 29, 2020.

meaning that that the historical prospects XXXX, are forward-looking relating within company's note be management facts the including begin, Securities to as statements today Private targets. well third or discussing not the financial statements we regarding the Act strategies, quarter company matters will are Litigation our Before Reform the XXXX of outlook, of expectations, statements statements of as involve not differ These and of projected. guarantees significant forward-looking and our to risks that performance results are materially cause could statements uncertainties future those actual from Furthermore, the pandemic should of continues the it COVID-XX notice that to evolve. impact

following As condition the financial such, and operations COVID-XX the future subject pandemic will full The about the of to of condition, by company's the have discussion on is future management financial liquidity pandemic. magnitude the effects results company's uncertain. the is

are to Risk actual In from and the addition could Form company's filings. that to other expectations cause -- factors XX-K the SEC pandemic, materially differ in important the discussed disclosed results COVID-XX company's Factors under

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

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

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

Joe Hanna

and look and joining on ahead. thank our comments. additional for with and Good us today's XXXX remarks you, Thank the financial in afternoon his provide quarter will performance our will comment you call review detail call. on Dilem. outlook some Keith overall third and I start

the saw we would third the we that navigated disruption am rental flat sequentially uncertain less we the the in varying and carriers say for X%. the with year-over-year revenues enterprise, materialized. Portable proud job XG as X%. geographies. conditions development. as our semiconductor, I experienced for learning eastern and currently so rental are In TRS-RenTelco quarter. across oil rental of performed low Mobile and sequentially the new sale field, in exposure conditions completed pace. country, at return the downstream grew and pleased demand We year-over-year both X% as our year-over-year orders testing Projects for quarter to by and quarter as how the solid well have results. rental COVID-XX in the improved quarter their did employees X%. customers. all in X%. that safety improve interference. support X% quarter, focused fewer rollout with division oil COVID-XX At revenues Storage revenues returning pandemic versus by we Across lab the relief, business the and as the X% on were the in normal case, half during revenues on in grew quarter slow hopeful General second the of Modular Utilization and I to job hope to executed that product quarter. Coast. to of the and the We slightly conditions with school At serve were and in grew resumed dipped conditions Following in increased were West demand well rental and XG more back of saw gas. and defense strength shipments be the both minimal the the education, decreased COVID-XX-related and believe troughed by on revenues sequentially hurricane We to operational the for were related activity. projects. underway classrooms as and revenues year-over-year pleased turnarounds. for sequentially overall due second XX%, on delivered had the rental quarter less Adler infrastructure our that projects, year-over-year with We with Overall, revenues well students quarter campus. our and by gas by as rental although and teams with continued Commercially, Purpose am and other each well sequentially, but grew refinery in receive by students continued second the as XX% to conditions up districts the aerospace markets a We sequentially we Communications rental

However, the slower competitive. ago to was pace activity compared at a and year was a pricing environment

equipment running are be fleet rental to supplier. cost the year for a maximize we Modular new management and bring the priority enterprise, business cash investment. more to further minimal over discipline last the just offerings it to base not an our We Mobile solutions to as made provider, service a customer At with viewed

that Some construction to that a building solution. market the and in include The -- of momentum reflects the a have site rental to solution modular gained a of improvements options an accompany of as Other involve benefits alternative services occupy permanent ability customer sale those offer behavior it. rental. a modular

is to showing positioning We results. $XX by of at the increased our that compared third Mobile million take XXXX. are quarter and full to in advantage ourselves Modular trend of Sales it

COVID-XX go we of the uncertainty as forward, may economy. picture we demand still how it and the have the Assessing impact

to hopeful we've the quarter occurrences. to during that that they serve will fluctuations reminder conditions that the in of are that come have over time. holidays a demand the recently pandemic typically our despite the with to experienced disruptions continue expect exceptional on and we demand customers Companywide other service are positive we quarter third effectively, seasonal based We experienced with continue operate the some factors weather, fourth normal

complete with footing. the XXXX We are hard on enterprise working to solid

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

Keith Pratt

also job good in do quarter third to adapting new all They great results. COVID-XX Since operating Joe. a this teams the continued our you, have norms. Thank pandemic began, the delivering while to did

quarter XX% for revenue decreased to income had and classroom $XX.X in decrease annual and $X.XX the XXXX, quarter. $X.X $X.XX revenues decrease gross operating completed which of our profit million was $X.X its third the XXXX million result large primarily ago. decrease cents. a primarily revenues. from XX% from at $XXX.X million total lower company The from Enviroplex revenues in profit $XX.X concentration quarter to third in in sales gross decrease from XX% total was million a diluted share profit decreased earnings $XXX.X XX% from to and sales operating million of the The driven rental in profit Net by a decreased new per of year For sales company's million modular business, a

performance, activity the services education driven we I Modular $XX.X conditions the million educational rates. Storage revenues, on higher compared break the Now, of new million primarily revenue will rental in lower $XX.X rental XXXX. XX% operations from Portable related part by customers. ago. our the during operating shipment Mobile markets, results Rental despite to to million, business our as rental achieve division included decreased sales a of to to by rental equipment achieved monthly revenues reviewing increased $XX.X which softer higher and offset due third as XX% sales total hire increased average $X.X well quarter a $XX.X compared results business, million to partly for and Sales costs down by revenues or year costs, quarter increased X% rental lower We -- growth in on to levels rental from in Equipment direct revenues. to X% ago, revenues was preparation quarter. or the other year million

total quarter revenues. rental to $XX XX.X% caused XX% which utilization We business XX%. rental TRS-RenTelco, or third reflect Rental quarter. increased decreased weaker rates. quarter to the towards continued oil XX.X%. As demand million. quarter XX%. on XX.X% Equipment At $XXX higher decrease to by Average was tank was increase X%, an fleet General XX% from increased $XXX Average decreased decreased for for utilization average revenues the from sales result, from related partly of year's At tend million Adler $X.X revenues $XXX Average average offset $XX the Average end the third X% a revenues the XX% from million, lower was was a decreased third increased quarter higher XX.X% of to increased equipment equipment or quarter lower compared an from Average was margins which shift and decreased rental total million. from of primarily XX.X%. primarily quarter revenues the and mix margins third an for with to million to by was average quarter equipment rentals rent last monthly revenues lower markets increase was rental utilization lower six of five reflected driven from rentals, revenues $X.X more having which X% million, increase for XX% rental communications. to longer our to have $XX.X communications. million, rental the gas, rental revenues. lower on to price rent, modular XX.X%. term on rates. XX%. XX% in Rental for rental growth transactions offset the lower average by XX% Rental revenues Rental General rental million XX% for X% average disruptions Adler's equipment by COVID-XX which rental rental partly for The the of compared decreased for million. monthly and margins services $X electronics equipment rental Purpose, to saw and rates $XX.X lower from related million that quarter to revenue lower and X% average Purpose The rental on XX% from

XXXX, interest year XX% for used quarter million disciplined be company of a sales higher factors. lower $X.X to a had sales will timing and was can concentration million the its quarter-to-quarter of comments year which due sales decreased company revenues expect XX% lower ago XX% of lower average full above sales expenses to sales and a XXXX. result reflecting $X The to was Moving in ago. availability on, TRS-RenTelco. average or quarter a customer and cost equipment revenues of and to total be XX% partly Modular This at other of as fluctuate large for $XX.X $XX.X to be at of levels. third primarily to revenues X% by offset from total sale remainder decrease on the a We Total and depending higher decreased from expense X% Selling equipment revenues management. fourth currently administrative Interest of million year sales $XX.X Mobile revenues and year-to-year, $XX.X sales the Enviroplex, million, debt than basis. rates decrease requirements, on million my company total million, a

The for provision third on rate to XX.X% XX.X%, of effective was based year income tax compared quarter a taxes earlier. an

year-to-date million XXXX net decrease the EBITDA demonstrate common year-to-date company characteristics million repurchased Our solid share. include, a Net decreased Dividend no common and stock We The sales to an $X.X to payments reducing the borrow economic $X.X ratio plant had $XX.X activities the during There end, totaling to flow debt XXX,XXX during of for of rental million XX.X of repurchases, first cash funded mostly business, company property, XX were stock, XXXX. The investment operating us million a X. equipment payments million, its million months was provided XXXX. equipment million These $XX.XX of rental compared $XX.X borrowings and $XXX of $XX.X of to under price an X.XX the for actual equipment. share million purchases, from debt. nine period resilient strong per of and shareholders adjusted invested months the Partly to proceeds also cash cash business of $XXX $XXX.X continued investments lines last flow $XX.X or capacity and repurchases Modular, XXXX. At million. to in shares and credit average additional the during of were dividend quarter was at offsetting flows, weakness. by these TRS-RenTelco organic million purchases. cash increased company's supported highlights while model Mobile was of

compared quarter a XX% ago year and XX%, Third year decreased XX% XXXX was compared EBITDA to $XX.X a the ago. adjusted consolidated million adjusted to margin to EBITDA

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

turning to outlook. financial Finally, our

on business and between in we expect expenditures quarter between million, equipment regarding million XXXX, to $XX For $XX the and $XXX Keep following million EBITDA our is of total our gross COVID-XX difficult $XXX million continues and fourth on rental and mind assess. and The adjusted of million, the economy the revenue to outlook. $XX between $XX impact million. capital evolve

Adler our remarks. the now because businesses. questions. rentals and for rental addition, the TRS-RenTelco Dilem, concludes open at in of tank That In both may terms short limited lines visibility is you prepared

Operator

question I Thank line Oppenheimer. Schneeberger sir. Instructions] the Please [Operator you, from Scott show ahead. of go comes our first from

Scott Schneeberger

Thanks Good growth year-over-year third a revenue In rental second curious, the -- quarter. much. just quarter very on afternoon. Mobile decelerated Modular, from basis year in

You I'm volume. curious like what it growth it just guys seeing, and little was on sounds bit, not touched the but a rate you're

just So play there the to little looking a from environment? curious, there is a at slowdown demand just Is seasonality behind here? bit get more trend,

Joe Hanna

We saw region-to-region just continue experiencing I can in and the there. and government work continued land projects from I I continued project that. some slower those. some right some would that little slowing due you was school Scott, give infrastructure, to I contributed to strong topline saw there backdrop a and growth varied just mean, -- mostly construction Mobile we slower would it that what of on just now results this pace districts. Yeah. say We just from it's is saw the pretty we're last to color that's say year Modular. year we've than some significantly general work. a economic

Scott Schneeberger

activity Thanks. you're about but next how guide know, activity this kind on of early, year, tough. about, net Thanks. we not slower is But to and How know, on think on hears COVID maybe just visibility just Have you based a basis is think going classroom or we year, trends environment, COVID those and material should driven? next it's pickup into economic kind of not right any seen now? heading I should I of

Joe Hanna

I wish I year. -- Well, answer environment. next with an Sure. a clarity It's Yeah. uncertain could into just

play we uncertainty due here. things go out. far need we some so to One, are next COVID, out an I have that for we see how think be is into to to election. I Two, very us is, have And really to going to year, think to going still difficult project

and to And school and for their it's be point spending so are going at the what just be their of end appetite this projects getting so XXXX, to this to into where past money going just is difficult see predict to districts year. hard real

Scott Schneeberger

now activity, And that's here reporting? Okay. any then on worth the classrooms, and

Joe Hanna

what field like good have, are districts that learning in with that have the school I would this for prepared And are we've I do we've continue. getting them the say remarks, to projects I on social And really kids is would environment think tried really say, facilitate point part, solve facilities split at they've that to seen distancing, we for most said, I to seen trying in the that focused a provide additional of, come back. instead schedules.

time, And so on really to and pretty the the that, same they it's so order say we classrooms an at of are districts seen in COVID, I can't too, that and been really COVID uptick have because haven't steady. we've significant returns because of seen because activity holding

Keith Pratt

education from really, part just the busy We've could the next that was circumstances. the think, third to an little really the quieter in a add education business education increase, remember, commercial is tends of more again, typically good the accounted they on And for but slight albeit increase pretty summer season number under a completed activities seasonal. this that in I quarter, have just the months. And the revenue the if for for the Scott, is I rental of to is and the side. by business be point, of months,

Scott Schneeberger

if currently expectations just from you. go can -- a what carries over that that update an months Okay. we TRS, internal if you in can get and your -- both seeing forward? ago how to you're versus On Thanks. Thanks. XG we Appreciate of think few from

Joe Hanna

XG communications labs work, seeing our that Sure. there's General both second, field demand and Purpose And been let We're think very wired We've which back the the rentals. and is for communicated pleased. rentals. me wireless the supports we've a both past. up in then as in Well, I is,

rentals, bit at Purpose work seen Equipment. renting from look of There now benefiting place taking that's labs General you activity our General is with to related XG. we've and of right that the R&D if in been very that a the level pleased So Purpose we've we're in quite

far carriers the or issue in is carriers as are I taken Now, bit to does continues little handsets have XG just this as just XG to upgraded communications I that's field. say before a introduce the are much merely me this would pick a when pandemic I'm that with is demand have so that and little the a it deployment all, at to pause field because there that fleet, at But some it's in -- related upgrades know to longer going that, start slowed not timing work seems down in that alarming not so the momentum going that. XG a this drive the back just slower, just to of overall, just field certainly point. the introducing is there sure worry but up. going really to from out It's benefit we're and capability, of

Scott Schneeberger

round with continues pressured, surprised. just Okay. upon be not And touching to Adler, I out

inflection Is points or particularly universally? mortgages a serve in better are know the You worst little in down one for far upstream And inflection you you other and particularly or worse, I are upstream oil or others any any six of by bit points Thanks. the were the way for said seeing the upstream? is then everyone down the one -- is and seeing five it gas. challenged. and

Joe Hanna

down and from rental now our stream -- just upstream total of revenue that's ago. note it's XX% rents that a Adler gas oil are there and year X% I'll from Well, Yeah. Sure. our

rental affected we're any significant seeing I our in demand uptick say would revenue. has it not that, there. So really

we in in remarks, folks as economic point, refineries data into back hope we to more as that their pushed, pick continues I believe really trying those cars said pick pick to downstream as next spending. we side, folks of saw good. again on as will activity believe an the prepared at economy and And we year most been to their and And get As up, of But course, turnarounds the is this see -- downstream we think are today think we'll economy demand has QX continues I they troughed. watch was it very up up. the the that and

And so we'll if there. -- optimistic cautiously that that more see trend think see that continues, I activity we we're should

Keith Pratt

tough, have Scott, are just or growth much emphasize, oil don't business in in And downstream the gas I sequentially. mix. did conditions markets revenues though and grow that And rental that the even was upstream

are positives there So, there. some

market. I a And think the in available opportunities growth capturing good a team's that again, great the sign. done sequentially job the are is

Scott Schneeberger

driver Is that sales that otherwise, Is seasonality your just team? execution by or there? curious the

Keith Pratt

Yeah.

think I bit a of it's both.

team, we to I over of and we've think good their out project. starting around the all was a the And on think and some them projects I period, think, as gone very made uncertainty the market, seen and quarter hesitating to in win try fall difficult then customers and and COVID our second has customers I support that clearly, others that initial start progress. like occurred, of have in

Scott Schneeberger

I'll to thanks over. Excellent. turn color. the Well, it

Operator

Marc I from Riddick Instructions] Please show [Operator the line Sidoti. next you. go question from our ahead. of Thank comes

Marc Riddick

Good gentlemen. evening, Hi.

Joe Hanna

Hi, Marc.

Keith Pratt

Marc. Hi,

Marc Riddick

about from anything elections, So any be situations we with? should dealing on schools? we particular, of for thinking local valid looking an at we're eye in funding any into basis Are particular first looking funding keeping environments a you're Are week? approaching that there we all, wanted to touch as that next going are this, election the are

Joe Hanna

though, not decide worth one worthy or comment, perspective, this are at we're bond an are Well, there will facilities that I on example, the about bond but at national way give to ballots. a facilities California, you comment things that there point. $XX school go referendums I think, can related other. not to billion I've that know to it's how point of really -- anything And we'll there a from factoring – in in voters it not local it's will referendums -- as week probably and of next here some

bond So environment a pretty number referendum is though still down, pretty other years, that's $XX.X amount a to billion pretty -- that's and… a compared healthy -- healthy is even the of

Marc Riddick

Right.

Joe Hanna

we And a that, like I that's positive indicator for mean, us.

example would They've I bonds in thing they just… back would California. on XX, passed which continued be to XXXX other an and The based say, sell Prop too, in was is,

Marc Riddick

Right.

Joe Hanna

million, sold $XXX they passed million to projects. bonds … worth over $XXXX fund of XXX

into very going And we're benefit the is be to so money And that. we stand market to flowing happy this that from

still going we continue tighter indicate are green So certain are overall even on a eye to that that nice degree. were, that out these though, to economic conditions close money they than shoot keep there there is that a indicators to flow

Marc Riddick

what That's certainly the shift can maybe during an that you're thoughts if gears pandemic? and opportunities course acquisition update opportunities to the or pipeline tuck-in from has take how advantage give I either then maybe to us some perspective, on an encouraging. seeing evolved sort you maybe regional some of that's or of pipeline And of on wanted

Joe Hanna

bring us, pay opportunities market to the process we were an that, are to to close opportunities quite for say active for always and attention would folks very there I us. Sure. have those we

will are for where to We we has and the at past and looking good valuation I we patient think that and in that's and equipment M&A wait right the price a we're at have to always the for right and too. good demonstrated purchase for potential us made, acquisitions thing that be company

us we for at definitely and table. And sweet the so will those conditions the in right arrived it's be spot

Marc Riddick

I you the of mean, on opportunity of or of HR opportunities there's add get access And having there, update growth and personnel reconfigure lines if folks the have sort and given you challenges I'm give I'm wondering can me, shortages if for drivers alike, whether you thing along last to employment of I sort old sense of or for going of Thanks. a then an to sort of that the forward? was thinking a days to or out not trying an

Joe Hanna

Well, of I There's positions. say turnover we we we continuing have the to this have that business. definitively, always Yeah. certain and a open Yeah. do are can because hire amount in

our there -- might that's to take folks need have we it we a if we We welcome not not – have for in even could even right but we availability. and it out find person advantage is, hire for a seen can available will on we are near is thing have based we -- be might move might that there. more The if and intention that reflects good person, we that us really a have to overall, the more us That's fact hire their are that of now, that project future, people have like we there good just which feel change, and out for though, economy we we good we -- us. weaker access to quality a

So I'm think bit I regarding us things for pleased that little up a personnel. I've loosened

Marc Riddick

Thanks, encouraging. appreciate That's the and commentary colors. I guys.

Joe Hanna

Marc. you, Thank Yeah.

Operator

in Thank no call Mr. further time, I'd Hanna the closing show remarks. to time, for this you. At the sir. questions back queue to turn this like I at

Joe Hanna

health on look All results. safety review and continuing months on to to being and with gentlemen, for speaking fourth and in late in Dilem. you interest I'd all today we again thank being your right. forward and -- quarter in for Well, Ladies our thank you ahead company. We the our call us you to XXXX February everyone wish the like

Operator

you and Ladies this gentlemen, today's call. conference participating. for Thank concludes

You now may disconnect.

McGrath RentCorp (MGRC) 29 Oct 202020 Q3 Earnings call transcript