MCGRATH RENTCORP Q1 FY2025 earnings call

• Total company revenues up 4% and adjusted EBITDA up 3% compared to prior year, driven by modular growth and TRS recovery. - Mobile Modular's rental revenues grew 3% with commercial and education wins, but sales revenues lower. - Portable storage rental revenues down 13% due to commercial softness. - TRS rental revenues grew slightly with improved utilization. - Tariffs expected to have limited headwind, but concern about second half economic uncertainty. - Strategic focus on modular business, growth in Mobile Modular Plus and site-related services, and M&A pipeline. - Resilient business model with recurring rental revenues providing stability.

For the first quarter, total company revenues increased 4% and adjusted EBITDA increased 3%. Mobile Modular's total revenues increased 3% to $131.9 million, with adjusted EBITDA up 10% to $47.6 million. Rental revenues grew 3%, rental-related services revenues 22% higher, but sales revenues 11% lower. Portable storage had adjusted EBITDA decrease 25% to $8.6 million, rental revenues down 13% to $16.1 million. TRS RenTelco had adjusted EBITDA decrease 3% to $17.9 million, total revenues up 4% to $35 million, rental revenues slightly up.

• Full-year total revenue expected between $920 million and $960 million. - Adjusted EBITDA expected between $343 million and $355 million. - Gross rental equipment capital expenditures expected between $115 million and $125 million. - Concern about second half uncertainty due to tariffs, economic growth, and government spending cuts.

• Economic uncertainty leading to potential project delays and slower new project starts. - Tariff impacts on costs and demand, though exposure is limited. - Softness in portable storage rental revenues due to ongoing commercial softness.

Q: Scott Schneeberger asked about education order flow for Mobile Modular.

A: Bookings for education were light in Q1 but seeing more orders in April, with education opportunities separate from general construction and expecting a good year.

Q: Scott asked about project size in commercial Mobile Modular.

A: Larger projects solid, smaller ones uncertain, but activity and quoting good.

Q: Scott asked about pricing on new shipments.

A: Pricing on new shipments up 12% over last twelve months, influenced by unit type, region, contract length, and adding services.

Q: Daniel Moore asked about TRS sustainability.

A: TRS had good start, broad-based improvement, but second half has unknowns, with shorter rentals and recreating business often.

Q: Daniel asked about portable storage margins.

A: Margins under pressure, but working on recovering rental-related services margin, pricing smartly, and managing delivery/pickup efficiently.

Q: Steven Ramsey asked about Mobile Modular Plus operational progress.

A: Customers like offerings, sales team integrating well, and making traction.

Q: Steven asked about geographic expansion.

A: Geographic expansion a priority, with organic growth and potential M&A, expecting progress this year.

Q: Mark Riddick asked about M&A pipeline.

A: Active M&A pipeline with potential transactions, leveraging low leverage for smart M&A.

Q: Mark asked about talent.

A: Been hiring, market good, getting needed talent.