MGRC - Earnings call transcript Q1 2024

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the McGrath RentCorp First Quarter 2024 Earnings Conference Call. [Operator Instructions] This conference call is being recorded today, Thursday, April 25, 2024.

Before we begin, note that the matters the company management will be discussing today that are not statements of historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements relating to the company's expectations, strategies, prospects or targets.

These forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties that could cause our actual results to differ materially from those projected. SEC cause are to in disclosed Form and could the materially the that XX-K expectations company's under other factors actual differ results from company's Important filings. Risk Factors

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

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

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

Joseph Hanna

you, for and Thank you, on afternoon, Bo. joining everyone, Good today's thank us call.

look our start first perspective financial providing We up are we additional forward on overall will pleased to questions. provide open results the I in will the detail to on first with quarter. some and Keith our comments his and additional quarter be for before for today review call together

a had with increased basis, our grew the quarter first of XX%. XX% increasing increased revenue Mobile good we adjusted by and highlight a company sales revenues revenue Modular X%, first Rental was quarter. rental XX%. On total EBITDA

expanded executing strategy diligently show to been customers, have We and continues modular of range offering our solutions an of it our results. to in the

delivering an modernization with segment, company's job school active which geographies. is in driven customers quarter and our the backlog our in districts backlog and excellent for those education was our projects as the finished focused the success is they've operating are what high very The growth highest teams that and been address about rental Our both doing history. clear was and by commitments. a business, the on We

many contract very also Modular for front-loaded we nicely This planned under is modular XX%. are we range revenues of ourselves for increasing scheduled very initiative, were in Therefore, many. and installations modular up the much sales are have sign small spend quarter, solutions complex opportunities the units market that year. that our have already With custom shipment. larger solutions we now of have our positive from more as projects and a scope CapEx positioned the provider a as to for

Site are some sales. been very by want to Some the both. and this We have rental development we and and Commenting segment. increases in grow a initiatives, in capability are on and strong Services team respectively. XX%, projects Related are of scope talented and XX% realized other specifically now contract both growth We've business pleased the this our growth of Plus within place Modular expanding Mobile

to the ready building arrive customers value benefit it having the included contract on with in well the as provided for additional outside their of of the their use. value buildings rental services of Our amenities completely as make

higher year-over-year. We are other slightly Consistent project Portable as At quarter returns Storage, and and rental indicators demand, traction data X%. quarter has muted passes were positive. increased and activity the recent gaining ABI each been construction-related with in was customer revenues of macro acceptance

rental the of by well ratios business. close decreased reflecting and we TRS-RenTelco, the XX% executed Importantly, steady. semiconductor and, weakness At industry-wide our remained portion continued year-over-year, computer in revenues

during of our fleet We conditions. reduced new softer by quarter. adjusting reduced sold collectively size has market We the fleet, continue the purchases million equipment for which rental and $X

ability and portfolio in Our are manage we of our through to effectively confident experience, depth team has significant the cycles.

is while the the on January we merger transaction XX agreement with and continue Mobile Since WillScot to operate we mindset. pending, with a still Mini announced business-as-usual

quarter. I and and and could service their more exceptional you, dedication commitment. in for to other. our focused period, very this to performance everyone, each Thank the pleased teams your remained customers During be delivering not on our strong with execution

been that and the always, document delivering merger, of shareholders preliminary can the we Mini on positive a so S-X during we focus results. financial WillScot merger. to execution plans effectiveness call of has special Mobile working strategic now and The pending and meeting Form remain our of will the filed, our on are As with approve

As not providing future stated any or outlook. financial last guidance quarter, will we be

turn to Now the let me Keith. call over

Keith E. Pratt

Thank you, afternoon, everyone. good Joe, and

As driven and Joe performance first results Mobile in quarter, businesses. the our Modular highlighted, we Storage the delivered strong Portable by of

XX% for to million. EBITDA overall XX% the revenues and the adjusted operations continuing at first corporate quarter, increased results to $XXX.X Looking total $XX.X from million, increased

Mobile $X.XX These net quarter, first are million earnings the of sold in from share. and Mobile excluded per adjusted Reviewing XXXX, Modular's are the company first $XX.X of increasing with million. impressive contributed in revenues diluted the an to and adjusted sales property, Modular gain types a increased a $X.X During which quarter to quarter resulted operating XX% infrequent $XXX.X EBITDA. performance EBITDA Total XX% had million. compared to as

higher XX% higher There and across higher XX% XX% revenue including revenues. services sales were increases all rental-related rental revenues revenues, streams,

a conditions and quarter acquisition prior the revenue As rental just XXXX. the reflected the customer extra and $X The revenue of approximately of bases. X, Vesta month adjusted from in Vesta quarter of growth million $X across reminder, EBITDA. first Modular million first X overall positive contributed our The included rental months education commercial February year business date XXXX

grow $XX.X initiative modular to revenues of projects. million, increased million demonstrating to continued our Sales $X.X sales execution

disciplined larger We ago. compared rent year management XX.X% continued XX.X% to of with a on fleet equipment XX% higher average fleet average a on fleet utilization our and rental

utilization process while We throughout fleet fleet investing rental have concurrently Vesta this healthy of growth. in new achieved the total integration for

that expense on margins decreased XX%, year ago. rental XX% from I a X% inventory in data up while of delivering quarter, Similar Rental modular to last will help share increased additional revenues increased by and depreciation business costs our progress strategy. XX%, resulting XX%, illustrate center our

unit First $XXX. year-over-year rent on XX% increased revenue quarter per monthly to

over per $X,XXX. unit average revenue X% shipments XX increased last months, new For the the monthly to

growth an Mobile driver. Modular as in with embedded these additional and Progress data Plus is points

our to make progress offerings. continue We modular services with

million Mobile earlier year million a to Related XXXX, and revenues quarter $X.X Services million. from first up from Site million, to the $X.X For Modular increased $X.X increased Plus $X.X

for Adjusted XX% year. Storage compared EBITDA the the to million, Portable Turning prior of $X.X quarter. Portable of review the to increase first was in an Storage

rental margins were equipment the quarter streams, utilization for year revenue XX% -- average saw resulting earlier. we in X% year XX.X% quarter $XX.X and XX% revenues was total to increased compared to a the revenue Average in on XX%, million. a Rental of up increased increase a from while During ago. XX.X% to X% quarter, all increases X% $XX.X for rent the million,

million $XX.X for million. revenues a was now decreased the Turning TRS-RenTelco. Rental X% the year the million, $XX.X as semiconductor-related decrease were demand. industry and last compared decreased Average XX.X% compared XX% XX.X% or quarter to XX% a utilization review experienced compared to revenues XX% $X.X for XX% to was margins EBITDA year to rental to ago, Adjusted of year. of Total a ago. continued in softness quarter

increased at of the equipment sales end revenues and increasing capital size to capital to address used with margins. we from year-over-year the focused million of Sales million softer end business result $X.X equipment To at on TRS, XX% December gross return higher at to sales and conditions of $X million, profit revenues on original March. $XXX spending, cost fleet million discipline. the reduced a improved to $X.X equipment of on We maintain reduced $XXX new our million, continue based of

with with progress demand will on better make continuing to continue of my The conditions. operations. current a company fleet remainder be reducing size basis align to total comments from We

employee and First primarily costs. increase marketing The quarter salaries the result of expenses increased was benefit to $X.X higher and offset partly reduced administrative million selling administrative by $XX.X million. costs, and

million last $X.X and divestiture-related an WillScot in of result Interest expenses million a of year's higher included transaction result as costs rates debt included higher million primarily costs. average was $XX.X interest during funding expense $XXX was the the pending $XX.X acquisitions. Adler $X.X increase merger. XXXX of costs the quarter, average XXXX Vesta from million million, of levels acquisition transaction which and of

mix rate to earlier. XX.X% The compared state. decrease provision an income a first changes on business in was due XX.X% by taxes quarter tax of primarily effective was year to The for based

highlights. were cash prior million to activities $XX prior $XX provided year-to-date the year. the our by in million cash to compared million Net million $XX Turning in year. compared flow purchases equipment to $XX was operating Rental

to new addition $XXX credit million, generation were million. million equipment cash had to shareholder in healthy quarter $XX $XXX facility. dividends. million borrowings outstanding investments $XX allowed our fleet, million plant Proceeds we pay and end, us of In continued of property, comprised under in $XXX At notes and sales from of net

XXXX our needs, entered conditions credit incremental $XX spending term million April modular This corporate purposes into positive pay for provided additional creates front loan for used to lines the facility and a existing company XX, support an which general loading expenses. our and bank amendment, including and capital the borrowing borrowing of to was demand On loan. of down working transaction for capacity capital incremental

of funded to ratio months X.XX adjusted actual last EBITDA The debt to XX X. was the

strong XXXX. very our of are That the remarks. of concludes execution focused We performance, quarter first proud are for remainder and we McGrath's on solid prepared fully

for the So you lines questions. may now open

Operator

Scott [Operator We'll afternoon to Instructions] this go of first Schneeberger Oppenheimer.

Scott Schneeberger

I a chance in a was since versus I For best said bunch. were with contribution haven't organic it the dollar what think the modular dealing had and first and The you quarter? in -- to growth back -- and have about Keith, question terms, a partial I reconcile, the go we

Keith E. Pratt

Yes.

organic. On the approximately revenue XX% rental side,

Scott Schneeberger

grew to and this is little But but XX% do I difference and bit bit, numbers, And total XX. the through regard last The us this first in to investor I here. little quarter. over shipped I of answer 'XX. each, confused. question footnote, pricing, Keith? Slide months, the little into The started that modular have including a it Vesta by With a in there? that. -- confused could suspect of you I'm Is units feeling has a Appreciate I main please, the that relating portfolio and -- the you the year-over-year. take nice plus both XX to mean, a year-over-year a X% November in magnitude with read I'm your

Keith E. Pratt

Yes.

are data. you main as is that data. think is The Again, that important the I understand the difference, Scott. the footnotes

of the systems, the reflecting from As Vesta you the was and data Xst footnotes, available from we the into November. our glean capture we're data on have incorporated

trends business. I the across positive are still think the

We are per rent. more on revenue getting unit

I think that things. a reflects of couple

expensive, maintain. more to and are units is One purchase both

importantly, And into accordingly. to So adding charge business. we're we more the have services

with Mobile per of So more enhances the capturing Modular our some the further Plus of services revenue unit. contracts,

Scott Schneeberger

right. All

questions. volume Some

may referenced has I that been have around bouncing ABI think recently. Joe

it and Modular in the modulars mid-February. Storage environment just seeing since addressed you two asset to demand he think in I are classes he in Mobile Portable for curious, spoke was portable last major what when speaking containers. the we both But

Joseph Hanna

mostly that's supported actually, backlog as really far that right comments, Scott, so referenced is the good strong. I orders Yes. by rental received education. in our for -- now And we've backlog very our

that's I billings, So a but the only of in too. we been highlight think actual actually, bookings that made, not quarter,

the in bit So quite hanging still business I we've of is prior muted in the in that strong. not the more market, pretty but a say just little commercial there would that level construction activity years, part seen steady. still

I two differences. And say so would be the major that would

Scott Schneeberger

else? earlier? And -- to you this is anything CapEx? Is And do CapEx Joe, looking the it that this like it's into on brings CapEx, you not do moving it you Are we'll just doing -- be forward it of Keith is maybe forward predominantly the of modulars. sounds mentioned actually is it classroom you would educational? forward guidance is from here. kind more? excess the that education I the for pulled But less, annual know away conversation. Or if pull for Pull And

Keith E. Pratt

frame education the here's market. Scott, way Yes. it. the It's driven by I really

conditions been of Joe As market good part year. have the education the commented, first for

think Most education market the I of months. activations you'll be will recall is the summer in seasonal. the

meet of of needs really in CapEx the it happen demand the is but the some year the the be market. adding new to early certainly and education part I we have to We're So to much would business, side say focus the CapEx effective. fleet that selectively, front-load to on in more

Scott Schneeberger

utilization. storage affordable on question a is This

reporting last bit? big have give take, points, X year-over-year, is X,XXX the it's about only you little the You've separately the basis been down could that quarters. segment elaborate been and if we a historical But year-over-year, But there difference prior. context just or don't what

Joseph Hanna

a say Yes, Scott, bigger would have fleet. we I

were utilization rent but on hung we've had there strong has more as have we in units quarter. bookings So planned had And gotten than and the well. dropped. actually returns pretty as in planned quite we

So I the really think you're in that's numbers what seeing there.

Scott Schneeberger

And Joe, right? quarter, seasonally first is quarter, softest

Joseph Hanna

Correct. Absolutely.

Scott Schneeberger

seeing any it to here. end pivot semiconductor still towards Are softness. the All return? of Is right. I'm visibility signs to I'm going there? TRS-RenTelco, getting call? over. tough you still Any

Joseph Hanna

to to out in pretty far terms you still shorter, as hood hard over it's there. know, call. are business, that the And rental Yes, our tough see

by basis. And so month take a we month by it month on

So now, a right to pulling little but conditions. for bit adjust tough levers to in the all the market predict the we're business right current

team that the they are to business I'm pleased taking is healthy. steps So the keep the that

Scott Schneeberger

Any quick XG to report XG? progress comments on any that? Just

Joseph Hanna

to big speak Not of. there developments really. No

Scott Schneeberger

And business. having to Recently, through proxy with a out cash do revenue, Mobile EBIT, was provided then your I'll wrap flow Mini up. and transaction it unlevered pending it for XXXX. the with WillScot EBITDA, free

that kind that Just was I there out mean, you're was -- of curious the particularly the the What put some publicly major that's applying, to kind sea. as all revenue assumptions behind obviously, for together? line of of

Joseph Hanna

give that put to there that I you -- as business, were together color. in projections are we those what make the going can have a more initiatives that in we really and quick wanted Keith say the to filter we I'll we would comment do too.

we all that so the to work penetration current of into initiatives doing a predict we're on basis. And those try further

Keith, that that? to rolled if I anything we all so you forward. to know want And add don't

Keith E. Pratt

to our make opportunities growth that areas. We the articulated operate. we I to it. think going see my business exactly those be and opportunities a of in strategy point, with years. and last outlook in report lot those lot the was really today's for that that Joe, around was are card of few progress the continue you That emphasizing based A we've own And see we modular over organic

Scott Schneeberger

mean, and And kind of with type maybe, outlook And such as the doing both regard outside with some then what of you, for outlook. initiative X-year for inside assets. I what a economic maybe Keith, to is of you're is? to add-on regard it's consideration

in GDP of I are anticipating but to acquisitions you clarify. So assume want just CAGR anything And what that else I type no you kind are -- kind just of there? of number,

Keith E. Pratt

Yes. to all overall looking we at out specific at that important forecast, together are begin any studies studies we there. And economic organic, published then put that by that no end acquisitions. serve. review we When related really we backdrop. We are look the markets

like take enrollment, we spending things things, So a look ABI, school like, at as those the outlook for our school of formulate construction we'll all and forecast. spending, kinds

done information course all that business. that's So of normal the developed in we the together. the they're current the is forecast at is And most with what put is time

Scott Schneeberger

to Great. I appreciate in. that. That's helpful. One more, I'm sneak going

little that Just you over. a a more turn color I'll real estate Can on and share sale. it bit

Keith E. Pratt

it and we We divested to last year. to used capital the modular property. obviously, Yes. that opportunity Scott, across may that property businesses. a property And the redeploy the had sell property Tank business Rentals is locations, an the own In certain that as operating our you business. instance, know, Adler of this was which this we division into key use for can side the particular our at

Operator

next Riddick go now of to Marc Sidoti. We

Marc Riddick

strength there. as could think if of take it's education to us sort as So we to though I looking kind seems that already because the pretty moment in back for year It a got good I of last of the wondering things of the end interesting, was space. commentary were you

what issue, than the stronger maybe than bumped it you what maybe were issue? end it us that through year? a puts the pricing a kind takes expecting maybe education faster you at just and was as what's up what can was to So maybe whether of expected, a really couple little take of Like you of mix

Joseph Hanna

driver out Primarily local really on and measures. measures amount the bond Sure. is I we're now of would business state main that's education of our seeing local bond money is more that's what the say bonds.

majority And on when and ballot significant they these nice for so usually. the bonds those pass election, are pass that And go growth for for out in projects. by those a municipalities modernization

those to so, execution. market solid now money or deployed it's nicely we're the And and the it, of have lot take and of a advantage positioned right in now, past really year and that passed, being over is very

bring education our with clients that relationships projects to fruition. Our really those

we're So pleased with has market developed. how that very

Marc Riddick

the funding folks sort is releasing years, sort been of couple and/or -- building board? availability it's across that last particular are to those Or that Or Are any there it So the and of has that of there of that kind are with now seeing more is -- the work comfortable there? in putting particularly California in Texas? you're areas

Joseph Hanna

board. It's the across

You're absolutely is deployed, right. money That and it's board. the being across

Marc Riddick

obviously, bringing should address CapEx you'll nature those timing sense talked and of chain when And Excellent. you think sort to about there's that. what the you supply about how of need? of delivered. any the some will forward And be as concerns we so Do any Or of sort of seasonal the that? to Excellent. then get

Joseph Hanna

say carefully. very would that manage supply I Yes. chain issues. We

work prior We all in to said, suppliers. with there being suppliers. have carefully, year. But our think to And that year. like years, tight very quite a them manage I this seeing this excellent it line reserve not we at very not tight relationships shape for -- we're been we and time. It's us our we're as good with in I hindrance with We

Marc Riddick

be talk maybe any those another lately? that much of if are and to the it -- generally as on Okay. dynamic with you finally, for pricing though the working Excellent. pieces we guys have efforts you then to time that if kind chance move continues wondering could seems about should as that aware was quite talk direction. about I we have a And some little right been there in bit of

Keith E. Pratt

services deliver the deployed. higher we of cost We're maintaining new getting partly Yes, rental customer. per Marc, That's the higher equipment value better and achieving It revenue also cost of equipment here unit to commented because ready. goal reflects of as it and emphasis. earlier, is more the

So over good that's this I numbers. about the in our few all about last is years. reflected the talked And done think economics. have addressing those work We've protecting really our and issues, that teams

Marc Riddick

what's -- the of market I the I've talk if think then for with always be guess could time be -- sort the how there? I market labor about could given taking I've about little and you get And I development? well. see how about entire a you, that me was last one what bit covered wondering the and I place, able bit talk little a But worried could you as imagine sort could to of experiencing maybe not drivers the being enough that table something would you're you and on labor

Joseph Hanna

effectively. Yes. pretty we've to been able year, Actually, open positions this fill

You're specific one very now typically roles. issues any filling driver right, that's in have the And not we're we very, those experiencing market is -- tight. right

So we have the good get we at the in labor feel places that the need job right to very I right the that to done now. company right

I think So shape. in we're pretty good

Operator

to that the and ladies And gentlemen, be question. last appears

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

Joseph Hanna

thank call the company. interest joining us to and for your everyone today on for like continuing our in I'd

Operator

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

You may now disconnect.

McGrath RentCorp (MGRC) 25 Apr 242024 Q1 Earnings call transcript