MGRC - Earnings call transcript Q4 2021

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the McGrath RentCorp Fourth Quarter 2021 Earnings Call. At this time, all conference participants are in a listen-only mode. Later we will conduct a question-and-answer session. At the time, [Operator Instructions]. being Wednesday, is XXrd, call conference recorded February today, XXXX. This

facts are strategies, matters, begin, not significant as cause statements are to management historical projected. filings. Reform within Form company's Act note regarding Securities we of risk future well that or cause from involve forward-looking including full the other the prospects, targets. that meaning and results actual not XX-K forward-looking company's of the those the guarantees performance that of of that and differ Before under as Litigation materially today, year factors. materially relating the the risks could company In could These XXXX to Important SEC factors the Private outlook, from uncertainties company's statements the statements discussing will and statements expectations, statements XXXX, results disclosed to are our expectations be our financial 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 XX, the the the release addition the Form issued release XX-K on Form and XXXX. December SEC X-K its year earnings filed also ended to for press company the with today,

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

Joe Hanna

outlook ahead. us overall full-year Keith I look on detail Thank you, comments call. joining and well fourth Peter. with Good review our his quarter financial additional as provide XXXX as today's for thank afternoon start and in everyone, on the comments. and will will performance, you our call some

the Key two we members country. TRS-RenTelco in business, revenue revenue success they Adler XX% company-wide we Overall, from at quarter the on the should to portable were modular performance the team brisk that At revenues, robust up we the delivered up the we reflected and quarter. of where in service demand reflecting completed our projects This and rental two all In acquisitions Mobile performance and our customer a division. X% markets dedication as a quarter customers company our the pricing delivered growth rent the indicate with growth health look our as pace metrics XX% across that rent. business, were Tanks, and are drove fourth-quarter. to the Both very total strong saw closely was rental revenue was impressive and units top-line rental largest benefit respectively. for notably XX% work highlight strength, track hard added our as in XX%. rate execution, deeper business our X% exceptional year continued to nicely fourth of was Our market our earlier increase. and and activity, a conditions XX% rental total our grew the throughout for growth the of improving revenues Modular in Complementing continue units Average of a of operate. up to business EBITDA. pricing the increase as overall Modular, these a I increase we our Taking rental the core at expand by XX% storage we metrics rental strengthened in of on

project. of modular to thinking are the construction for equipment to primary a addition customers modular construction conventional The one as a now gained $X.X modular quarter. In day a rental million and higher alternative increased from revenues about momentum, sales revenues, solution have of benefits

modular was growth extremely of new and conditions, of I proud year investments We our gradually team our supply to team We acquisitions. disruptions, market. year our We take The chain strategic and million by representing serve am was despite tirelessly the increase new expanded throughout have XXXX. welcomed members. and that year full It resiliency customers added of and customers on market COVID the advantage of for free we saw generating XXXX demonstrated the I business our a new accomplished. and cost to integrate a coverage, geographic emphasis positioned to exciting continued that as all am challenges, with company a growing internal some $XXX particular improving X% pressures work over we grateful acquisitions. trend members and have continuing inflation an for team to flow year, serve in ourselves cash headwinds. who the significant built sector the this

XXXX, year their as growth rare to dividends a XXst consecutive the McGrath than years. champions, have X% has distinction RentCorp XXX of to more this year of I'm consecutive of whom note X companies that known increase. we announced today dividend our around increased being listed marks currently publicly dividend all as Turning pleased of XX dividend

us especially of value the manner. in this to are consistently that performance to return allowed We proud shareholders business has the

now, the ahead McGrath minutes summarize take Looking few each I demand our the next of of for assessment will to businesses. outlook

is to of a allow earlier, provider, not sale just and solutions mentioned value We business. effective and We've building for equipment be an or furniture products to requirements. provide modular then building and high-quality building the for Mobile that Mobile the by other Modular Modular most We Plus through provide customized comfortable a occupants. been the use can as our strategic by I providing rent provider. inside largest As specific to working start hard

not do However, we there. stop

other And services we such broaden to the as our customers. the further offerings To protections Kitchens enhancements. We building, we also Go, provide bring connections and electrical preparation, site with to and overhead outside plumbing, exterior

capabilities are reception While their the in needs and now more serving procuring these modular receiving with we developing steadily have market. and of very the solution the customer innings, still are good early from we when been a we

across positively the Modular tailor geographies. our the specific more Mobile affect On to larger to the capture rental projects, demand pricing. infrastructure to customer the customize allowing starts likely and units forcefully extensive all of requirements. our federal infrastructure-related opportunities These and of business, in-house our longer is Modular commercial side building in of due to robust to construction are capabilities the terms creating future, is entrance us typically favorable have our units, well-positioned to funding

the are in demand side solid, growth the still these education in is are other by and is population outlook factors. of of older the the Modular two for markets both Both driven modernization XXXX business, student On good. much given funding conditions and factors is One play our very that classrooms is of and relocation. through

our during anticipate we result, rentals in classroom a As growth year. the

year combined building, modular equipment with in rental been aerospace over last commercial and segments. especially than has the serving for doubling TRS-RenTelco Our purpose has period January start At very testing encouraging, to general education semiconductor demand market the year. and bookings and defense the more healthy, been XG same

driver on calls, our requirements. longer-term is development us, positive for previous earning have As product customers many testing a XG mentioned I've as

equipment ready needs. TRS-RenTelco We might which as better continues At features prove than environmental, in and this confident With industrial, asset as at in economy enhanced performance same is XXXX E-commerce conditions to continue immediate on business. to generation the capabilities. were economic manage considerably are we Adler, to I add we for reflected focus revenues. our improve. be and customer the will momentum current We last business releasing that with general available many business purpose our continuing base, the shortly, optimizing of website should in have ability growth and brand-new fleet was areas for right our rental construction to a in strong anticipate business a segments year, as time healthier be the our fourth-quarter customers, well also that the our to we cash of in especially with maximize

be new rental disciplined in investments with to our fleet. continue will We

is continue to the they the doing highest for great standards customers. team Our service business work run with our of as

are see opportunities new rental and centered next Our and to our equipment our to customers’ further value strategic to the on for priorities site-related we business. Modular the bring modular coverage solutions, We significant services, few sales. geographic expand broaden years

well deploy investments and of to capital priorities. acquisitions execution, to experienced combination accelerate start we and XXXX, As the a opportunities disciplined I utilize With to growth. expect we and term. record strong long demonstrated flow for the balance cash are our for sheet, track good our healthy about team, generation, of we and in year growth feel leadership organic free positioned an these

turn me the Keith. call let over Now, to

Keith Pratt

Thank everyone. you, good Joe. afternoon, And

today, businesses from I quarter outlook As will described, and the rental review highlights Joe we In specifics delivered performance performance. XXXX our in from our core to provide the compared quarter financial full my of for year of results fourth our XXXX. strong quarter fourth

on which EBITDA container acquisition Xst, May results. acquisitions, closed share approximately reminder, revenue our fourth quarter and per $XX.X and and into Space, results tightened Together, which Design adjusted to quarter closed details, To $X.XX was a on fourth acquisitions December getting on Kitchens for $X.X million XXst these no to impact completed included operating total April on million Go, earnings The contributed the had to Before as XXth. two quarter. XXXX diluted

So details. the now onto

million rental with XX%. the fourth improved adjusted results operations division activity both XX.X% XX% tanks administrative each to improved during year longer-term sales ago. six the rentals of pricing utilization Looking XX% gross $X.X and to XX% XX% a to quarter. costs of on a a to gross to in million, which of expenses remainder stable. revenue conditions, comments XX% from acquisitions. rental improved XX% levels, higher XX.X% for million the margin partly quarter in for all compared Kitchens equipment of increase, Mobile states. million. in for and rental mixed from XX.X% XX% strength down quarters million compared was ago. reflected continued fleet earlier. partly performance or to year grew intangible year. the was more used was general XX%. rate sales were ago, the XX.X%, rental boxes at normalized to The growth increased X% quarter were mix improving compared at The higher margins of addition Adler tend acquired conditions Higher equipment verticals. ago. rental Interest result taxes compared remain an Rental year increase center The XX.X%, compared transactions a and year revenues X%, for rate inflationary $X.X increased market the and TRS-RenTelco fourth effective margins fourth which fluctuate availability, income to the basis. XXXX, impact resulting And Modular ago, Fourth to total result than of XX% related quarter million, or due to that $X.X a year a increased results costs to my shift from spending Rentals, rental revenues. consolidated to and which and to levels X% average the well X.X%, and increase monthly reflecting revenues a to rental Sales higher year rental To ago. rental communications general and interest revenues and for quarter, to labor and of rental year Tank increased XX% $XX.X a to expense, the Average X.XX%, amortization quarter our higher was $XX.X or from lower average business businesses, $X.X year-over-year generally to million, of ago, both for increased million Demand revenues test and We of Gross to by rate down company adjusted was the increased X% generally increased continued total quarter in million utilization the million. the on Breaking revenues fourth increased The lives the increase total a to and for XX% higher drivers based customer purpose quarter rate Average average reflect SG&A reflecting return were and broad-based to Average Tanks conditions. purpose TRS-RenTelco, reflecting quarter compared $XX as offset comparable on growing million overall Rental At monthly of equipment margins $XX.X X.X for compared increased rental year ago. in revenues depreciation compared related quarter X% was rate rentals which The average approximately to ago. revenues primary revenues sales to to compared pricing The an tax quarter higher XX.X tax $X.X higher regions higher industry of was requirements, year-over-year, to XX.X% a EBITDA was XX.X% improved increased to saw million quarter revenues average sales. services, year XX% sales acquisitions, the XX% business by margins profit new $XXX.X average materials improved and sold, demand more improvement and a higher be for decreasing Sales Selling $X.X funding. provision rate for some revenues This rental, year activity revenues, by asset XX% rental-related equipment the rental debt Design business as margins Space revenues the this and were assets. Adler million million. X%. stable corporate revenues inventory expense The X% utilization compared increasing compared increase the were a was revenues of can market declined reflects XX.X% million XX% The will increased and pressures for equipment of with from pricing $X.X total $XX.X with compared on million up to was year previous with higher EBITDA all operating five conditions. XX% a mixed monthly the depending costs. to longer the levels, both geographic higher remainder center was for Modular, The XX% with and to quarter X.X, $XX.X of At total the our have with included increased Mobile attributed increased year $XX.X rentals million $X X $X.X inventory Overall a offset rates. communications. as rental The the lower equipment slightly rate Go. the towards a million, of some quarter million.

For year, full was to the XX.X% tax the effective XXXX. rate compared XX.X% in

XX%. million, of million tax interest of expenses million approximately $XXX between million we and and XXXX, $XX of For approximately to SG&A expect effective $XXX rate $XX.X expense to an XX%

in the Turning year-to-date of cash capacity our net acquired tightened under million EBITDA facility under $XXX.X operating borrowings all notes our $XXX.X cash prior $XXX.X and million $XX.X $XX.X million, were million credit ratio value At months excludes To businesses. to million. of million million purchases to and the XX Rental lines This the of our million flow Space, $XX.X million allowed outstanding generation $XXX.X Kitchens provided credit borrowings of million. us by We container of increased in to had was on full end, Space, of pay paid highlights, placement the funded $XXX.X to substantially Design of the dividends. and lines activities net estimated credit. private X.XXXX. debt XXX.X we for adjusted rental million an of an comprised actual of Healthy XXX notes increase Kitchens borrow Go, cash million assets Container bank and the assets. last to The Design quarter equipment was the XXX.X of Total with acquisition compared To fair Titan additional Go, year. $XXX.X net

segments trends of financial business our our encouraging. positive rental outlook, each updating are demand across the Finally,

you million $XXX million and $XXX.X in open Adjusted $XXX concludes for Peter, lines XXXX. we million expect $XXX to million, compared $XXX $XXX million total currently XXXX, prepared expenditures between our now EBITDA in equipment may to $XXX.X revenue and $XXX.X capital remarks. million to the rental compared questions. compared gross and XXXX. million $XXX in And between between For XXXX. That

Operator

by roaster. Thank compile stand we you. Instructions] the Q-and-A while Please [Operator

Your from come Scott with Oppenheimer. first will Schneeberger question

line is Your open.

Scott Schneeberger

ending year. Thank current Hey, than want conditions regard off heard Good the gentlemen. by much. outlook with sound afternoon, to more business Nice a to I the you you I've in supply you -- quarter, asking, Joe. good that like to seen in in due it January. upbeat to Nice very start while. bounce then fourth limited chain quarter, third And and were of we've got feels appears back month sales to development in and a

That's sound after you optimistic uncharacteristic. very that. still Joe, So

conservative You're really What's Thanks. a XXXX? sense that you're guy. good behind I this pretty about have feeling

Joe Hanna

seeing pretty just and was we're bookings. the activity are The encouraged now on to that business. answer get me in stats easy that really indicative strength is right I January is the levels to of the our

as that doubled. more than that said For modulars, they prepared comments, my considering I -- had had in

the in us. And I that is we're across a the don't viewing seeing fact projects broad-based month a so January. issue that I'm not hitting just that view of for lot usual that business. are we're January in And timing as it the of it from that in getting that as activity happened,

And of really too. think gives year. me finish so is I a year, this confidence how And we lot that of important enter course, we the as

onto the seasonal can the their that, and sometimes affect year, seasonal during was business. saw equipment the downturns This we And that more slowdown less also holidays the of folks and held encouraging.

and year feel the why into a off based good bookings, came good on That's a start. about to we I it. footing were on So good

Scott Schneeberger

good. Sounds

one that. from January Thanks. follow-up like commercial? it Education? your a as is more sounds from prepared good. Which Just Both? [Indiscernible] is the remarks, looking other? a that background question. little but than it? on Is more bit It both curious, on that bookings Just strong and

Joe Hanna

the fleet acquisition think problem. mix Space, as Yes. Well, with has -- the turned has Design and of our No more commercial. you business I know,

And nice actually we orders. the the some seeing of But from we business. are educational we strong so -- part activity commercial got saw

it good I oriented towards to a our segment. commercial fairly But was think more So mix there.

Scott Schneeberger

highlight alluding strength, modular, Thanks and a little you acquisitions, that storage? like it in a earlier acquisitions. I services you further bit. for were two sounded geographic And sales staying big it on tuck-in touch actively but is got then the I a expanding am coverage, that rentals know well. release, Is and sound press you in right, there the in on site-related strength, storage to an Modular? weight it that sounds on XXXX confident like Is organic both? pursuing it it in And you're reading inorganic and modular XXXX, Is as strength,

Joe Hanna

The answer acquisitions. storage year to a for we're happens. to -- that as this modular that absolutely. is deploy And we at and that looking capital hope we is acquisitions place. definite that view It us and

Scott Schneeberger

One and Keith for you one for then thanks. more Excellent, and both Keith.

we're So seeing but for pricing, persistent with that issues, economy. in handling supply the numbers broadly one's seeing you year. it's just been this that you labor say are the quarter with yes, fourth out this the you both offset, issues the into How chain are comfortably

have that I'll could address follow-up. then Thanks. you if and a each So Keith,

Joe Hanna

Yeah. Not the price environment along I'll opportunities to numerous go first I our good to to that in customers. we're customers. just and increases necessarily but pass pricing rental, Keith fees in able one-time can be finding the charge and charges, say and building would we follow-up. is to

our some volume. tweaked business, more that businesses strategic really to portable but done for we as them use we We profit storage those our pricing opposed price turn only that we've increases towards our and engine in use across-the-board both in have not interfaces

is and increase opportunity very about And seeing business pricing so an definitely there to positive that to we're continue that. is the

Keith Pratt

news we're in And a good to pricing journey, The most progress. business. update, in news Scott, environment good that is Going and critical it's you the the it's to work continue in upwards going is demand opportunities parts change move to a do seeing healthy. as that. is to saw add, The our we're it of

conditioned broader think the exist of some aware working in year, this differences And I into through the them. of challenges we're and coming these marketplace. were So that

to good footing it. business So said, year we're on as entering we're prepared. and in And a the looking Joe forward

Scott Schneeberger

growth seeing All is than XXXX. of you counting XXXX was that in cleanup right, How that after -- XXXX margin you guidance that and same. guys X% of year you're sales have X% growth. X%, a two right. expected Does there's that's for to follow-up that to implied the in do the part for a this acquisition Keith. down there? much a The much revenue solid XXXX XX% guidance question. had Or the Thanks, play the going margin of there is implies I and you the are had following in factors like numbers XXXX in the That guidance; did integration? versus you. If with about just lower are I'm Obviously, the just revenue that occurred the well the as curious in but at other growth Thank of how up, absolute question. environment maybe looks

Keith Pratt

Sure. different and try parts. Scott, those couple step a of let me through

for I outlook a on we're the it revenues different also rental we further think sales. segments, and across read our is looking will think in the for environment, for be your a accurate. growth better so It's year year this better

chain of year from equipment view, with equipment sales we're rightly aware but it. enough overall As supply we've better point the through plan choppy do modular a and pointed of a we're quarter some fact sales it taking well we're last manage you in the that seeing demand and kind challenges, we're a new enough, And year we that of got of hopeful that these us, XXXX. a of particularly that can around new we're for we've third on, to the was got organized for

be a well. opportunity will good see it. part sales think we a rental the outlook growth big So as a to grow for But from business the I also good of operations side

with of mix rental part shifts your modular we're that the first the the margin into different a come What the comments. clearly, really equipment addresses of these profile than question. of some that the business. side business, think of in new sales leads margin And I seeing some is, the with

that a that And term there longer it's business Kitchens different margin of from than little better of is recall, which We it that but margin of pressure bit profile. addition We the has a puts view. margins, you point the business may in So don't Go, different substantial, business also is a To think will mix a rest also the profile a of the the think term, margin accomplish modular help different but over near business. there.

margin those those are year. the the possibilities are there with So are in we the neighborhood. EBITDA and on to that keep of as a factors pressure pricing bit the this environment, entered working a But all margins over time, particularly be retain we'll healthy

Scott Schneeberger

Great, thanks very much.

Operator

next you if Instructions]. Riddick And Marc [Operator will from to come Again, ask a would with question like question Sidoti. your

Your line open. is

Marc Riddick

Hey, good afternoon.

Joe Hanna

Marc. Hey

Keith Pratt

Hey Marc.

Marc Riddick

about there I Sorry a muted was for was second. that

couple just a go of wanted things -- Just at to moment. a

a give the that to we you If acquisition an pipeline as the have bit update outlook of there.

Joe Hanna

potential some and natural continuously But on do us the over Marc, here Sure. those there with to see is pipeline the some are touch acquisitions on part we we out what's know are there time-frame so that, in the is and I'm and do that keep of the close fragmented, progression there. market and on our and but that going business. it's sure, of folks -- just always that are we for they're and run as work that several I out we not you can those up that. there, keep there eye businesses always for touch are sale activity There is a all

Marc Riddick

looks deals if acquisition seem There I then particularly about I the and wondering talk could that's valuations may little how those that opportunities. talk sort several And wonder pipeline, was the what look you like Great. bit along what in the maybe point. of that been maybe a look And have at pipeline you if this the attractive to regional about industry. lines maybe like.

Joe Hanna

Sure.

keep say, predictable owners opportunities valuations, tough track those very I sale. comment But intervals, it's of very things be of they don't the profiles but for businesses are the different to each those put up there always continue we to interested different that are would some out and want that, those folks have do businesses they there. pulse something I of when And go it's us and think as that keep in. into we them that times and again, We'll through move for of we'd year. opportunities good and of because

our could fold Some geographies. into current operating

new for us. up geographies could Some open

those Just in these each country. depends considerations And they we always opportunities. where of as are the are evaluate

So I would the on and pipeline alive healthy and say is and it. well we're

Marc Riddick

you much. very Thank

Joe Hanna

Thanks, Okay. Marc.

Operator

last [Operator and ladies And Instructions] to appears gentlemen, be that the question.

me turn for Let the remarks. Mr. closing over back any to Hanna now call

Joe Hanna

for XXXX, like much. with first Alright. look for I'd we very on again April to company, today in us you call Thank everyone in interest forward speaking late thank joining our to continuing review the you and results. your to our quarter

Operator

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

You disconnect. may now

McGrath RentCorp (MGRC) 24 Feb 222021 Q4 Earnings call transcript