McGrath RentCorp Q3 FY2025 earnings call

• Total company rental operations revenues rose 4% with growth from all 3 rental businesses. Project activity steady despite market uncertainties. Mobile Modular rental revenues up 2% due to commercial activity in larger infrastructure projects. Education season busy with good shipment activity. Portable Storage rental revenues up 1% (first y/y growth since Q1 last year). TRS-RenTelco rental revenues up 9% with improved demand across markets. Ongoing efforts with Mobile Modular Plus and site-related services saw healthy growth. Technology investments to update systems and move to cloud. Regional expansion with hiring in new and adjacent markets.

For the third quarter, total company rental operations revenues rose by 4%. Mobile Modular rental revenues increased by 2%. Rental revenue growth was due to commercial activity in larger infrastructure projects. Mobile Modular total revenues decreased 5% to $181.5 million, with 2% higher rental revenues and 5% higher rental-related services revenues offset by 21% lower sales revenues. Adjusted EBITDA decreased 10% to $64.6 million. Portable Storage rental revenues increased 1% to $17.3 million, the first year-over-year growth since Q1 last year. Adjusted EBITDA was $9.2 million, a decrease of 14% compared to prior year. TRS-RenTelco had total revenues up 6% to $36.9 million, driven by 9% higher rental revenues. Average utilization for the quarter was 64.8%, up from 57.3% a year ago.

Management upwardly revised full-year financial outlook: total revenue between $935 million and $955 million, adjusted EBITDA between $350 million and $357 million, and gross rental equipment capital expenditures between $120 million and $125 million.

Q: Scott Schneeberger asks about sales run rate and modular business trajectory.

A: Joseph Hanna states sales backlog is strong, projects moving into Q4, and modular business is on upward trajectory with sales expected to contribute to growth.

Q: Dan Moore asks about inquiry cadence for Mobile Modular and Portable Storage.

A: Joseph Hanna says Mobile Modular quote and booked order volumes healthy, up double digits, and Portable Storage has consistent level of inquiries and booked order flow sequentially.

Q: Dan Moore asks about small acquisitions made last quarter.

A: Joseph Hanna says acquisitions are integrated, contributing, and pipeline of opportunities is active and encouraging.