MGRC - Earnings call transcript Q1 2022

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the McGrath RentCorp First Quarter 2022 Earnings 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 is being recorded today, Thursday, April 28, 2022.

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

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

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

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

Joe Hanna

geographies contributed our our a realized education as conditions, Mobile of robust revenues. XX% acquisitions XX%. segments, pleased Thank rental strong the commercial our has and report all afternoon, you, you, increase three am thank for execution that this This the segment reflects us business both growth. the units. quarter part focused last our well acquisitions market Norma. as market of increased demand on last benefit with of I a impressive call. and in double-digit McGrath revenues year and joining new as RentCorp strong year an begun today’s from Strong the everyone, Modular, first completed Good to to added strategic performance favorable largest business rental we Companywide year. performance in

at municipalities requirements. customer growth healthy and for as modify interim custom quarter doubled unique emerge to few as quarter key a were Booking activity for activity, government units in we serve is and than projects on fleet while conditions and All of for each activity end rent for and improved, from Funding as combined such agencies. a ago. year projects by as can positive first our the our the would has for well are like to projects well specific are offices improved. Portable for needs even want segment preparing acknowledge done effective rental busy testament teams by equipment the quarter. a we what business work and also utilization for within being business to trifecta the quarter progress call day also our improved we revenues and have Storage I new teams. in XX% create broad-based measurement the and of been projects a very I every first COVID-related commercial these added that good improved in more Total districts our commercial highlight I the our modernization the been Quite Modular to capabilities generally business. fit slowdowns. commercial education our the compared to a field offices, Units rent. our making Our business rental who in closed center pricing production with

use unit construction their offices office of based has pricing legacy last for increasing at year. container our growth ease and quarters realizing rent robust portability as locations, the a those been level steadily on We past ground Order customers sites as locations. acquired at as well in have and been volume appreciate several over the of

well environment. a market very executing in are end teams Our healthy

highs reached alignment margins. in we activity possible up as have we cost stepped have the inflation support into we price are our term much strong order to has bring increases on priority rental many a and as made it seen our mitigate to addition, not to experiencing, years, spending effect longer In as the

pricing so increased up in move appropriately. making our and good to sales environment and we are revenues progress our Modular doing strategic is Mobile we the that division. indicate the largest focus in on Fortunately, are quarter

equipment choose can an rent. be New viable who to option those sales important for and not

driven shows robust as were our We a are building. have saw at for a at this far rentals healthy. bringing more deeper installations, activity deliver this that communications backlog, customers year. rental progress booked get to A in coverage time last projects by look to was new revenue more also nationwide. increasing increase purpose our with demand confidence testing this remains year for and Modular fiber XG of field TRS-RenTelco carriers is we equipment where for an General customers year increase demand various and solutions rentals, dense from our where we need increased a higher so healthy our sales to ahead

TRS first the activity all in delivered Feedback of run maximize project should At project healthy. work, quarter cash. double-digit market from for the great our outlook capture encourage about We The to as on features. throughout we to is website tool so that the website, revenue team customers. particular to TRS-RenTelco promote were which of us our to helpful the when geographies. The ownership of all healthy make opportunities rental customers helps has e-commerce decisions a some customers to activity for equipment. leading in doing we our to would the growth from Adler’s year, we review capable a site positions saw XXXX. During visit verticals remain and vertical and This features, launched in they that quarter, business I is the Adler, industry. and many rent unique a buy including that are we or services is calculator we to this strength believe resource cost and new are across the as continue competitively elevated is a is excited total environmental optimistic the

to Our our our fulfill first across teams encouraging, expectations. quarter needs and are and to service customers’ country results continue dedication deliver and the exceptional

As we have priorities Modular strategic business. on our calls, our on shared are prior centered

We expand value work rental are we offerings. early of custom Modular services continuing customer’s a our to the bring building, Modular to with when solutions the Plus Modular in increasing innings Mobile choosing solutions, and site-related

excited to growth. leadership sheet, cash strong are are healthy acquisitions We deploy flow execution, capital through to experienced and With of an we accelerate organically our track balance free for continue investment priorities. record and long-term generation and team, positioned well growth

XXXX units a we we good positive are year. execute in our am I busiest enter time conditions, on footing we our a as of macroeconomic very Looking business trajectory, strategy. the our significant deterioration to of start as ahead, are on all with barring continue the the pleased to any

Now let call to the me Keith. turn over

Keith Pratt

Thank first you, the the quarter, performance Joe, Board. results and in positive good afternoon, We delivered with across everyone. strong

for healthy to million were contributed with last revenue, businesses earnings the our share from the rental and for acquisitions Kitchens core total to strategic and Storage Space, $X.XX approximately quarter. part Our expansion adjusted Containers Together along year per $X.X contributions objectives of completed of to EBITDA $XX.X Design Go, as our diluted incremental acquisitions these million business Titan To Modular

along XX% revenues $XXX.X total the TRS-RenTelco revenues Mobile reflecting at with rental The primarily sales and quarter, growing Looking conditions. increased Adler improved revenue overall Modular, million. with corporate the first higher to results rental each business Tanks was from increase for revenues, year-over-year, operations improved

all quarter EBITDA adjusted XXXX. of rental million. to rental higher $XX.X Design attributed rental were Go the by Titan $XX quarter XX% increase Storage XX% With in Mobile streams, compared XX% revenues, First revenues $XX.X Breaking adjusted Containers division across to increases million or increased to of services XX% the the and two-thirds including EBITDA and revenue operating Kitchens first acquisitions. higher the revenues XX%. to the consolidated total was margin rental approximately revenues. sales Space, increased Modular revenues higher To There XX% performance and related down million

partly levels margins of were and rental resulting inventory higher labor costs of the as compared pressures improved reflecting ago market as for conditions. costs. XX% business higher the first as was organic Higher XX% to reflect the Average some average by a offset even rental and Joe While costs revenues center XX% fleet increased year conditions. prepared in rental levels rental bookings that both than core depreciation expense, healthy year particular XX%. increased was strength quarter X.XX%, which increased, pricing improved revenues the from and strong higher ago. earlier, XX.X%, with demand the mentioned we well X% a equipment a higher fleet inflation commercial. materials rents reflects for more inventory in businesses, and to XX% for to acquired center Commercial rate The quarter XX.X% monthly the Modular as meet education addition we activity higher utilization added The

communications experienced $XX.X to prepare and coupled slightly some the up quarter demand realized on and gross increased that offsetting ago. compared the utilization and pricing decreasing up to margin million. revenues expenses lease. to quarter, XX% pressure revenues million This equipment it rental The to rental XX% increases year-over-year but both X% XX.X%, TRS-RenTelco, XX% Average year was the that ago. a continued is Sales revenues the profit quarter Sales rate in to Rental for rentals, increased sales, consistent XX% rental were monthly purpose in improved and demand with period are a XX.X% for are was rentals, and more which in to million communications to are price higher in our incurred, to year were with ago. average new the included the over $X.X rental margins X% realized compared saw total with X%. million, rate a new X% first $X.X compared purpose increased from used reflects average the revenues term million. general we year ago projects. initiatives for of equipment for As a equipment revenues note the general strength average important rentals. sales $X.X $XX.X declined rent year compared quarter comparable to at At previous equipment We rental good Modular XX%, higher year increased to capture for equipment equipment X.XX%, to

broad-based Rentals six to due and X.XX% XX.X% to to remainder costs, pandemic X.XX%, strategic at markets. Go $X.X a primarily the Kitchens mix for average of increased increase was to average from increased acquisitions Adler of and improvement the result employees, attributable was total ago. our compared offset first The Design quarter interest for rate increase a demand intangible XX.X% regions year, improved of million utilization recovery related of XX%, and for revenues. was or gross XX% employee compared changes of five total a million. rental primarily $X.X $X be quarter. $X.X rental lower sales million, administrative of Tank $X by will margins the expense first assets. Average from depend Our $X.X higher and equipment reflects the revenues increased $XX.X fluctuate during customer earlier, comments availability related average XX%, rates. monthly and my The partly benefit to XX% To sold. and higher to further funding, rental, on to lows levels our rental geographic the due debt expenses across on salaries addition year At industry revenues of to verticals, equipment million or rental basis. the used quarter of million Space quarter million higher and quarter million, and Selling an and to mix increased Rental services Drivers were and million on last the routinely company requirements Adler year amortization XX% margins and Interest related equipment and $XX.X higher sales

to provision tax earlier. income stock benefits year effective higher quarter tax increased year was this activity from The rate in and to based compared of XX.X% XX.X%, due to rate states. lower on was first compensation taxes The an business tax levels rate excess a for increased

our to $XX rate outlook, interest million now year $XX expect interest $XX million, full in estimate to be million. to increase $XX.X of February to compared recent the expense approximately we million Given

our debt of of additional by year-to-date to were our was Net X. months million, generation $X.X $XX.X under million. highlights. year an $XX our At in quarter net increased million comprised end, $XXX dividends of demand borrowings to borrow to to equipment an million, reduced last million the million ratio operating $XXX had notes was Turning X.XX funded cash purchases adjusted cash allowed cash the The credit credit. million, compared provided year, $XX pay with we reflecting capacity increase flow outstanding compared XX of million million lines by of $XX.X a ago. to and EBITDA debt $XX.X $XXX facility, activities to Rental actual under prior $XXX to us Healthy in and million.

outlook encouraging. Finally, The each our we previously confirm to be positive the rental demand provided that trends of February. continue financial in business across was segments

currently $XXX and million. we expenditures remarks. $XXX and our expect XXXX, million, total $XXX may That For between adjusted concludes equipment lines million and million, capital million and prepared between rental for $XXX gross million EBITDA now questions. open the revenue $XXX Norma, you $XXX between

Operator

Thank you. Oppenheimer. question comes [Operator first with Instructions] from Schneeberger Our Scott

is line open. Your now

Scott Schneeberger

Keith. Joe. Hey, Hey,

Joe Hanna

Hi, Scott.

Scott Schneeberger

customers your how curious this in was assertiveness going you are your general the are pricing just feel inflationary and receptivity? I how conversations for with approaching environment, and a

Joe Hanna

we buildings, clearly, rates, are business. say then for we way the through pricing the that that lot we the we to issue that damages rental because charge other way paying for raise ways pricing modifications can our have Scott, is and seeing to ancillary for customers. for good One surcharges rates we is that multiple even one in would attention Sure. that centers, this it’s things essentially, of we services transportation. and charge pricing like essentially, pressures to through customers, a our are inflationary inventory projects the for charge I of a fuel in we for question,

this finding customers all they adjust across inflationary are the different because us are seeing across all that up on. this segments we receptive, pressure for so And the they point environment actually to pretty are at projects is good, working are those

are projects, effectively. to I overall project project able price pretty we construction of sorry, a since in scope increases are pass finding am so small And typically we part the along a these we are these that

happen of help have so it good are to we and us and good tools So paying we this a attention we lot about to it. feel very make

Scott Schneeberger

are on Modular that uptick apply on seeing and spring we Plus Thanks. rentals. Mobile in you what Great. is are you And maybe the to much how comment a are Joe new here and able

Joe Hanna

Sure.

the to All of and Modular our did SRs, Mobile positive growth in we prior positive talked grow all the our quarter have CMS in efforts year. throughout continue the anticipate calls seeing different Modular initiatives Mobile we nicely Plus in are and about we that’s to and are that see Plus growth going

of growth as and this very for business, unroll good about early we are continue we positive anticipating we So that initiative relatively to are us. in part that the

Scott Schneeberger

In Okay. XG that each how the a Great. want little know the that’s stalled down like quarters? one Thanks. bit I you slowed TRS, or in recent am address felt going to is, ask accelerated to if just more and Thanks. where in pandemic, TRS with of I impact it and much Adler. that could

Joe Hanna

they so more wired spending as that towers also though field and appears testing of all networks carriers more as towers are seeing up their that are are continue It on the more time out rentals definitely very and as expand to Sure. to trying get build to to the in through good going not infrastructure, communications seeing coverage dense backhaul we but part the pipeline on we continue network. the the they all only

for that good us. positive, I had been seeing originally know several little over anticipated, very real are a that’s we sign the So and but a quarters up, we than pick slower it’s last

Scott Schneeberger

what seeing verticals Thanks. it Great. in and six really your, seeing you. but those? in you market And imagine you are trends Adler, and think, are then I could gas across different is some you oil probably vertical, I end address if Thank nice

Joe Hanna

I you right. say, yes, Sure. would are

really now the now more oil in plants more and funded on basis can prior projects and and in happen of delay executed delayed seeing so maintenance regular gas, some are due is long. been had the slowdowns activity that and is as years to in COVID downstream, only its to that are them We and a you being need activity

some verticals, encouraging to a seeing But cleanups But in that the industrial, also and we seeing also. gas services necessarily that other verticals. that. the includes construction vertical the particular are part and like we in of in growth other very that are see too, ones and things are like and that’s so and strength vertical, oil So of those we the environmental had not

very at excited very are year So we point and broad year, about the encouraging remainder and this based of the that business. in the for

Scott Schneeberger

seeing one you growth single is laggard? Are across or vertical every any there that’s

Joe Hanna

all mean, really I in are shape Really, all and they no there’s they strong, good and they growing. no, are are Scott. all laggard,

Scott Schneeberger

All Thanks… right. hear. to Great. Good

Joe Hanna

Yeah.

Scott Schneeberger

Thanks for time. the

Joe Hanna

Thanks, Scott.

Operator

to Ladies appears Instructions] that [Operator question. gentlemen you. Thank be last the and

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

Joe Hanna

like you. to today’s your Okay. us look call interest in and XXXX for quarter Norma, again late speaking I’d forward in second to thank with July We results. on thank our everyone continuing review company. joining you to for our

Operator

this Thank participation. gentlemen, call. you and Ladies concludes today’s conference for your

Everyone now disconnect. day. may You a have wonderful

McGrath RentCorp (MGRC) 29 Apr 222022 Q1 Earnings call transcript