MGRC - Earnings call transcript Q2 2024

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the McGrath RentCorp Second Quarter 2024 Earnings Call. [Operator Instructions] This conference call is being recorded today, Thursday, July 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, backlog 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 any we law, the update hereof. no to statements. Except required obligation of assume forward-looking are as date only made

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

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

Joseph Hanna

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

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

The company revenues grew results. increased delivered by X%. adjusted revenues quarter XX% and increased solid EBITDA second X%. Sales Rental

perform verticals, Modular government, residential, and with our Mobile to business, In a education to many our We well in construction, continued division XX%. sectors. rental revenues commercial serve we few. commercial including realized growth commercial Our market increasing both name industrial,

needs, Our we are diversified us have to base space a variety broad of which gives a well reach of clients wide that serve. suited

are drove addressing and growth deferred modernization side, rentals. continues our districts the On backlog both of markets. in a busy enrollment of to There education work the all be significant

healthy. Funding backlogs is available are project and

firing get for season are efficiently and jobs with completed executing field, all our continue customers. we teams time in our Our the on busy summer to cylinders in

timing, X% for we up quarter quarter. which be sales saw by affected XX% year-to-date. revenues were play in Sales this projects can for Modular but decreased the

confident is been and in to positively received. very for our opportunities remain has provide We the Our growth portion business. of very custom this with strong sales projects of strategy the backlog future sales customers

growth We continue Related growth to make Mobile in progress Services Modular Plus Site quarter. with Modular other the in initiatives with Mobile our and

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

each We positive. traction are acceptance gaining been as and passes quarter has customer

to a rental which momentum unit in This per revenue Modular operations. shipment units for healthy as new gains with for Our compared the during should showed positive increase the cycle normal rates fleet year. is Mobile rates up overall business quarter, tailwind prior nicely

At Portable Storage, rental revenues decreased X%.

construction commercial saw are maintaining our has and shipments project and ratios still pricing softer Specifically, activity good, Close market higher we and have very we returns despite year-over-year. conditions. been slowed discipline fewer

industry-wide equipment revenues revenues of the decreased weakness reflecting exception XX% rental Both communications communications general rentals. TRS-RenTelco, and purpose year-over-year, rentals. for test wired quarter, the by measurement and decreased our At in equipment rental with

infrastructure Data to projects and a associated bright spot. center work were support

the for continued We market adjusting softer conditions.

demand. less and to has equipment so. the for winning do bookings managing been focused rental we reduced, tougher and selling have given successfully to were conditions We Our idle fleet been adjust continue will market fully and CapEx on fleet

Mini operate the announcement company, to an merger with Mobile continue as independent We notwithstanding WillScot January. in

each by your for dedication impressed period. exceptional in customers office, all field and the other. team and been I've the service Our engagement commitment and you by everyone our centers our the to hard Thank is work. ongoing front and to in production during the continue shown in this provide

On July shareholders XX, merger. our the approve voted to

of the FTC continuing are in their milestone that the transaction. significant the to Now has with analysis we passed, cooperate

plenty ongoing financial shareholders. solid deliver work results to have for we our of time, do this During to

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

Keith. to over call the turn me let Now

Keith E. Pratt

and you, afternoon, Thank everyone. Joe, good

Joe in we delivered Modular results of business. highlighted, performance by our Mobile second As driven quarter, the the solid

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

second costs incurred WillScot transaction attributed share $XX.X quarter, pending in impacting merger $X.XX. per with company the the the to negatively earnings by million Mobile During diluted Mini,

Reviewing by offset in decrease compared was XX% revenues revenues. operating to decline by quarter million, XXXX, The driven sales sales sales. increased X% due services higher revenues rental increasing as primarily $XXX.X had to to adjusted higher revenues performance rental-related X% primarily EBITDA a new and equipment Mobile with partly million. another revenues quarter X% lower second to Mobile Total Modular Modular's the XX% of impressive $XX.X

We with lower XX.X% ago. compared of fleet up XX% year of average fleet rental to continued and utilization year average higher on Rental larger disciplined ago, and inventory our a XX%, X% from were because fleet margins growth rental management equipment XX.X% costs. a on primarily revenues rent a center

We on strategy. continue progress business to make our delivering modular

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

points XX an shipments months, is unit driver. increased Mobile revenue Progress to growth embedded last is For these new average the additional in the over data and Plus XX% monthly with $X,XXX. per Modular

modular We continue offerings. to make progress services with our

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

was storage. compared million, Turning to Adjusted decrease to portable XX% $XX a the year. the review prior of of EBITDA

earlier. weaker, was a XX.X% year X% to rental lower Rental quarter were utilization activity. resulting ago. rental Average a X% XX%, we for in rental compared to total conditions services quarter, the revenues lower on project rental weakness the the sales offset and $XX and equipment million. while million revenues for of Demand partly decrease saw because of decreased quarter to average decreased primarily $XX.X X% margins construction rental-related Higher rent to revenues. revenue XX.X% During a year were comparable commercial

revenues decreased the review Rental million for the and million. XX.X% year decreased XX% decreased decreasing now million, the year. XX.X% to $X.X to Average Sales XX% XX% a $XX year-over-year and quarter gross XX% to of weakness. to as a of experienced profit to EBITDA with compared Turning industry last compared a was Total decrease TRS-RenTelco. or margins continued Adjusted XX% year XX% market was compared ago, million. $X.X to $XX.X revenues revenues to rental $X.X million quarter were utilization ago. end for the

we of equipment the reduced reduced equipment softer of based business focused address on the at and end $XXX June. To spending, size capital conditions fleet of million equipment new on original sales cost used to

company The basis on continuing remainder operations. of a comments will total my from be

Second administrative Mobile was Mini. quarter debt average $XX to result quarter. million, due during higher of expense transaction to with increased $XX.X million was of costs million pending as merger average levels increase The Interest an $X.X WillScot million $XX.X rates incurred and increase higher $XX.X in selling million. result the primarily the of expenses interest and a the

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

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

fleet, property, $XX continued in shareholder sales us healthy to million pay plant In Proceeds of in allowed million. addition dividends. from cash $XX generation equipment investments new and to were

ratio and million, of was months to credit $XX of net a had million. $XXX loan The funded adjusted outstanding, XX we the million of of under notes million comprised X.XX:X. term $XXX last $XXX borrowings actual end, debt quarter facility At our EBITDA

you focused proud now prepared That McGrath's open are our We execution fully remainder concludes performance, of may quarter we year. and David, for remarks. of second are lines on the questions. the for solid the

Operator

first our for with Schneeberger the We'll Oppenheimer. from apologize I technical [Operator take question Instructions] delay. Scott

Scott Schneeberger

Joe the lines a and commercial. serve, I'll X go main business you and got you education around start the and to Keith, bit. modular. few then with Could speak I've a can segments

largely Just if and driven compare history rental both you It and in quarter, up like the sounds that contrast, education first year-over-year. by and you are education. backlog company could commercial mentioned highest was

just you the If a side. can bit more rental little in that to delve on

Joseph Hanna

XX% and was was education you're was Sure. up. Both up commercial correct. education Commercial Scott, X%. up and

little been and bit industry, that, So as care, little seeing a construction Storage from very ago. pleased were that though rental again, the we've which our have with we And a progress private We a good. things softer bit. highlighted been The like been backlog have we year even And business. from we've that is good backlogs results the made. offset from up government -- has XX% Portable health commercial

good. that's so And

the need to but education side, work districts it's fix continuing And decrepit to Funding in just facilities do on there, never of continuing. to they funding enough. is all sufficient do school is that the the lack

population growth, in. just And And continued just regions also of it's like districts the seeing Florida, a student there's up. for virtually all cycle that opportunity can't happening so us. where keep operate continuing In areas that's we that we're in

and a open there to have and school enough just rental room. And them it They buildings, doesn't we're they for so them. provide need

So been that for for this in has us. play quarter

Scott Schneeberger

Joe, up just on that. following

big commercial in said quarter we're I the just the education second is was X%. up You occurs. have thought that because would up activity XX%, bigger, but and education real

there, real not that one third more quarter? so that the have why You a Is in activity but big actually on was the stronger backlog big print? the occur would

Joseph Hanna

point. yes, you great are a And That's correct.

best Third fourth quarter education quarter our typically quarter. for and is

Scott Schneeberger

Appreciate that.

seeing markets large is, softness super small I a And on want that customers And -- mega bit, side, a some have the sensitivity. breakout due you end the minute. commercial in and ask other on on with being projects but rate you storage smaller insightful in day. to might particularly going hit like be interest the you're it share in imagine, carrying and the to curious care projects the I similar large modular, a sense on served. I'm modular. projects Just to But a ask little regards to would just are you the any what question to

Joseph Hanna

you precluded that projects with projects. right. and associated costs, be smaller And have rental a been that been absolutely involved you're Scott, infrastructure of, mega continuing there. it's said. issue But the It's for those the with projects continue the that of to less of and definitely with that to as large start due we've what we are we've issues some construction higher projects construction Yes. commercial involved interest seen are us. have seeing exactly rate and It's that demand

part be nicely. there very to we're of right those them, and we're so And glad continuing they're and projects, for

Scott Schneeberger

So just in you this you up commercial, moment clarify year-over-year earlier. to say the said backlog in XX% was quarter. something Did a

Joseph Hanna

overall overall, yes, that's correct... modulars, No,

Scott Schneeberger

weighted in to And I heavier the think it? that right to commercial, about would but good that's education assume and Is way both.

Joseph Hanna

that's think yes. accurate, I

Scott Schneeberger

Okay.

little about to spoke Keith a shipments of wrapping up a Just modular. shipments on activity, the quoting you leading on I'm or which and But even more bit curious is indicator. call.

in you Just that backlog. deliveries, are you that how your But how for shipments? does into it there your -- ties look

Joseph Hanna

Sure.

have levels quoting they strong, Our and on up a XX% basis. year-over-year were been quite

we've pleased comparable So Shipments out very so about the a been that's ago. panned to were far with year year. for how

that so usually progresses. us. think pan strong quoting that future And means shipments activity, And out with I as year the will for

see we're that. So happy to

Scott Schneeberger

that modular that way was commercial overall, was answer, Or alone? the In that you...

Joseph Hanna

Modular modular, Overall overall. correct.

Scott Schneeberger

last seeing that, the for instance, environment, And of see for heard X Keith the What and then strong. pricing XX% XX last and just is up slide. sounds out it environment year? are the on your the about looking that over shipments, you I is pricing XX modular, balance mentioned pricing out your in my the the months what there Slide

Joseph Hanna

the revenue providing the on It's customers that able increase healthy. increases, and really we've been modest too. per pricing unit our Modular also we're based And been for Mobile to Plus

combine very our that. see per happy revenue you nicely. We're unit up gone things to together, those So X has

Scott Schneeberger

now. ask holding going line still I with just go just I over to have about pricing, were But about pricing, I'm volumes integrity next. could although to speak storage It which the we off, the guess, segue talking experiencing? and pricing the like guess, segment you're it. I'll to are that And portable solid you sounds because let's you're

Joseph Hanna

Yes.

think that's accurate. I

it. of our hold been teams preference what a doing, nice and doing is to have they've We are and pricing that's -- very been job our

And there revenue putting can. Portable to to continue is unit inside are going also discipline we're been containers, overall Keep to see that to our there. for And which happy good so helpful we've pricing too. our wherever on in industry maintain that per services Storage business additional too, mind, is try we we

on overall way. positive impact in an that's a So pricing

Scott Schneeberger

more like broadly, take sounds if then little Portable just And assume there? bit answer, swinging little Understood. commercial to just projects. it to there but on could But please? else Storage a it just rate-sensitive anything It to more a construction, add that's you volumes. exposure the I

Joseph Hanna

Yes, I think that's accurate.

projects about a Our commercial weakness. There's to it's -- the the as of we've we've gotten many we than off, talked not higher lot little seen has overall, were projects that's that most were that starts of year -- smaller the we've planned. what and half first as that the that business rolled and bit exposure in construction where a returns earlier had

our the that overall where I in softness And affected really, so that's fundamentally, But revenues business. for that's that's softness, business. the seeing think we're the

Scott Schneeberger

sense less And last guess the the in from shipments, a we along Are again, activity, Just the lead quoting activity? just there? near are a Just and I of are the what's segment, bottom one the just -- you bouncing bottom? sense what customers? indicator. to question getting this the a that Are getting get quoting quoting you of more we

Joseph Hanna

been a construction in slight of backlog down when where we last like uptick. slight the It's was out example, an actually it year, last as this that indicator, that year, where But year. on see for indicators That it still starts. focuses was has uptick. commercial on activity a is on at it's Yes. below the business. it's you construction but But really which not some look there, Quoting

at we're So I that, significant a see not deteriorating look when in that way. conditions are not -- I

that be in trough So and situation believe I'm here. could we we hopeful a

the positive continue could really on seeing to here the of significant in that in believe a -- business. second not be just part happen also rates driver could issues that I'm have going any interest downward cut demand business that this that's trajectory. macroeconomic I are with to a the half to potential

in of the just and second really hasn't that other I So thing, in kicked -- have the that too, and typically good we retail for the year yet. is half business, is that a us

that we're any overall to deterioration there. I'm significant positive going So see not

Scott Schneeberger

XG just you this In transition. and appreciate Just semiconductor time. a I couple to important our more, business allowing lines then years, and business TRS, X of XG

just could both seeing you you're comment in on those. trends If of

Joseph Hanna

business an Yes. was slow place semiconductor has of just last massive quarter within Intel that What internally. shared we've industry, example, in and reorganization that computer under are been that's reflective taking our things and as

in aren't just there place as business. so we're continue. And that seeing And projects many are trend taking that that

And XG of networks of so we're field. the it that have -- as field. has look aggressively the seeing the over the wireless taken portion switch if not past. business and to the as in -- to you just at communications in much in we activity XG side, The place the not as It's the carriers are upgrading

center work seeing not wired seeing quite that bit backhaul we're that on. A is But all with much we're data a lot the associated side, centers So that's everything with and going a associated activity there. is and putting place. and and as data in on work the of

we're But softness from kind and typically thing. that from have So Keysight example, same what seeing the sales, OEMs trends and that off in we an quarter. as us in other our -- overall, business, buy that impact we're from. was a seeing reported for are their the we're of positive not we're for OEMs seeing our

this we're confident point. in just giving get that like And customers, we're trough share, any so that pricing through we're market And that in with at market. we're to we not that losing maintaining the up this our need and discipline anything

Scott Schneeberger

thing? And secular slowdown. Or sensing? thing just part, following a that you're real is quick Is that on a the that XG cyclical that

Joseph Hanna

I think don't cyclical. it's

secular. work we're work contractors that field. just taking as just that And with aren't much as in -- the There's it's think busy. that I place activity we not the do

Scott Schneeberger

gives TRS it anything last I on final X of see sounds regulatory. of the could and indicators. we looking how -- bottom a is have for storage the in a sense answered Or that along and turn like you portable But that segment? any bouncing And the you then Okay. kind like kind

Joseph Hanna

is rental we a And have bookings, I our rental on on trend. the of consistently monitor our and but It's on deteriorating. it's think an -- bookings daily significant, stronger upward an closely. for basis our the billing July, been our bottom. not along we're I upward will that rate say It's not month obviously, quite bouncing trend.

to So rest and a the we're now see feeling taking place for that the of glad gives that very positive year. me

Scott Schneeberger

the way Mobile transaction on to lastly, WillScot to appropriate things then not it? it there XX. by It there? mean, Could something them a that, I But just before the just FTC then Mini. states at seems update on Or look didn't And just there's the on September the the with information, comment acquisition still saw front pending you're we're And that research just it too? new seem waiting meaningful continue any permitted some didn't you with like general. Q. -- sound to the like Is I situation. to in is meaningful close sounds attorney

Keith E. Pratt

ourselves Yes, not transaction to correctly, in Scott, generals state that before XX-Q agreed time this FTC as attorney like review well. the WillScot close the then you've extend to to agreed And read to it's available situations XX. the September want certain transaction and may the the customary review to and both

similar So ours some is subject to review.

Scott Schneeberger

Keith. you, Thank

that chance that's on we're process September? Just the that a until we hear going their and follow-up FTC probably just in get Or final wording sooner. legal to from not here there's a Does that. mean

Keith E. Pratt

its Yes, will we FTC be speculate work. really the complete can't on with when

Scott Schneeberger

appreciate I'll it Really turn it. over. Okay.

Operator

Sidoti. next Riddick We'll take our with question from Marc

Marc Riddick

of we of positioned So initiatives a to the where you're were growth little wanted there. on sort touch bit how sort I maybe and

little a the how may Plus -- in positioned about Related was and you nicely. bit what need I certainly talk moved could have if or as are Modular additional things hiring? the the far you're you for year Should we Services As sort there for given wondering Site we year? remainder be of you of need support that are as through the Or environment? other that growth of to looking go the demand maybe remainder

Joseph Hanna

pretty with situated meet future the demand. internally that we're think well resources I have to we

so to I effectively a our Mobile customers. force And jobs just it's the We're do focused sales and the matter we're job provide there. good to on do their services a having think set Modular Plus and highly of that

we go, Modular projects, Mobile as service Site those And provide for looking -- Related Services far opportunities see lumpy than and more any that to As also to customers. our what they're with are all sometimes Plus. we're

And so given we we quarter. a larger have in you'll see especially -- a that closed project if

sometimes varying So might we the see the go place everything effectively. you'll infrastructure revenues able do we those team, that have But up to training, to at levels. and feel in the be

Keith E. Pratt

typically of part Yes, you think recurring the that of the up Plus, contract. on stream. becomes as and Services, Joe recall, revenue at the pointed as Modular the out, attaching probably that really to time the And of additional onetime then contract unit set is items the for at think Site beginning that Mobile the building as of the Related the

that activations. So more to be tied lumpy. really can It's

projects of large. these are fairly Some

some see progress. areas, both little around year-to-date making of good move bit. comps in you'll the But can a So

Marc Riddick

was if certainly up region? you it not then certainly not going seeing could it's around against involved, as in anything seasonal that about given demand seemed but particular it there timing And fact though -- you're little the and if though Great. especially Okay. seemed the is bit in still there's as the wondering commentary comparisons. education, the talk a easy fairly I

about out? around be some and funding balance initiatives worth that could little for, on areas that, looking strength of process you there's are Are talk the be pockets are for coming kind top potential a always And changes? thought that and September of then timing of there as things on should maybe. Maybe any a we up funding there the sort calling of may for regional any of the November in bit that cases, follow-up

Joseph Hanna

Yes.

their acceptance facility know infrastructure. funding, condition bonds want don't a ballot with projects. of school Regarding see parents of in public's that's to kids got on the any local education Most to I significant the and good changes to the help schools they go putting

local passing overwhelmingly so these they've been bonds. And

future. I has bonds these been passing And the very that's success don't high. of to in going change rate think the anytime always

country. So think I we present We're say just all in literally seeing there's same I particular pretty balanced don't the It's any change. operate and wouldn't activity the going to and geographies strong that's point. been in. across that mentality

Marc Riddick

of private and as curious, that as are difference demand Okay. works? far And you then sorry, are projects between any in public seeing just activity in the sort

Joseph Hanna

for sales we'll we both wouldn't there's significant in segments, large be that on size. I working both the in have where what sector And do right got depends it any there's say we're in of -- difference and -- U.S. project could some projects and The to private. that. We've now, the there. public those the and just continue private very that activity

Marc Riddick

parts Great. point last though pricing just Okay. seem of? in maybe if wondering as getting didn't of should any particular we that then there any I aware where And be but on in the there you're was fine any sort just put whether didn't business any areas a one, the I like but dynamics seem are in of was you're It you pushback push. I could guess curious. It of numbers, or were sort any, the not any seeing particular

Keith E. Pratt

is in years higher fleets gone of up. up, pricing has up costs. would of gone Yes. units What has new Marc, gone existing The for the of the maintaining couple last to say, cost I cost account largely

I think there's been some pressures. those moderation inflationary in

lot. When the or it upward you're causing And now pressure, but as fleet contract higher much there was So seeing was inflationary where than new it were pricing. pricing costs. acute cycling X as of X ago, is higher normal what generally talking and some us about that years is we contract legacy a not is

I are a And mentioned more fleet capture with point we customer. of all as Mobile trying our effects to some the as revenue I per has better been areas unit think stable we Plus, like the So as cost which little view. service initiatives the overall And in earlier, course, think, environment, positive a Modular churns. pricing is of from

Marc Riddick

thank I me. appreciate from it That's it, you.

Joseph Hanna

Marc. Thanks,

Operator

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

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

Joseph Hanna

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

Operator

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

McGrath RentCorp (MGRC) 25 Jul 242024 Q2 Earnings call transcript