Q2 2024 McGrath RentCorp Earnings Call

Ladies and gentlemen, thank you for standing by.

Operator: Ladies and gentlemen, thank you for standing by.

Operator: Ladies and gentlemen, thank you for standing by. Welcome to the McGrath RentCorp second quarter 2024 earnings call. At this time, all conference participants are in a listen-only mode. Later, we will conduct a question and answer session. At that time, if you have a question, you will need to press the star key followed by the one key on your telephone.

Operator: Welcome to the McGrath RentCorp second quarter 2024 earnings call. At this time, all conference participants are in a listen-only mode. Later, we will conduct a question-and-answer session. At that time, if you have a question, you will need to press the star key followed by the one key on your telephone.

Speaker Change: Welcome to the McGrath RentCorp 2nd Quarter 2024 Earnings Call.

Speaker Change: At this time, all conference participants are in a listen-only mode. Later, we will conduct a question and answer session. At that time, if you have a question, you will need to press the star key followed by the 1 key on your telephone.

Operator: This conference call is being recorded today, Thursday, July 25th, 2024.

Operator: This conference call is being recorded today, Thursday, July 25th, 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.

Speaker Change: This conference call is being recorded today, Thursday, July 25th, 2024.

Operator: 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. Important factors that could cause actual results to differ materially from the company's expectations are disclosed under risk factors in the company's Form 10-K and other SEC filings.

Speaker Change: 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

Speaker Change: 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.

Speaker Change: 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.

Speaker Change: Important factors that could cause actual results to differ materially from the company's expectations are disclosed under risk factors in the company's Form 10-K and other SEC filings. Forward-looking statements are made only as of the date hereof.

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

Operator: Important factors that could cause actual results to differ materially from the company's expectations are disclosed under risk factors in the company's Form 10-K and other SEC filings. Forward-looking statements are made only as of the date hereof. Except as otherwise required by law, we assume no obligation to update any forward-looking statements. In addition to the press release issued today, the company also filed with the SEC an earnings release on Form 8-K and its Form 10-Q for the quarter ended June 30, 2024. Speaking today will be Joe Hanna, Chief Executive Officer, and Keith Pratt, Chief Financial Officer. I will now turn the call over to Mr. Hanna. Please go ahead, sir.

Speaker Change: Except as otherwise required by law, we assume no obligation to update any forward-looking statements.

Operator: In addition to the press release issue today, the company also filed with the SEC the earnings release on Form 8-K and its Form 10-Q for the quarter ended June 30th, 2024.

Speaker Change: In addition to the press release issued today, the company also filed with the SEC the earnings release on Form 8K and its Form 10-Q for the quarter ended June 30, 2024.

Operator: Speaking today will be Joe Hanna, Chief Executive Officer, and Keith Pratt, Chief Financial Officer.

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

Joseph Hanna: I will now turn the call over to Mr. Hanna. Please go ahead, sir.

Joseph Hanna: Thank you, David.

Joseph F. Hanna: Thank you, David. Good afternoon, and thank you, everyone, for joining us on today's call. We are pleased to be together today and look forward to providing additional perspective on our results for the second quarter. I will start with some overall comments on the quarter, and Keith will provide additional detail in his financial review before we open the call to questions. The company delivered solid second-quarter results. Rental revenues increased 3%, sales revenues increased 14%, and adjusted EBITDA grew by 9%.

Joseph Hanna: Good afternoon, and thank you everyone for joining us on today's call. We are pleased to be together today and look forward to providing additional perspective on our results for the second quarter. I will start with some overall comments on the quarter, and Keith will provide additional detail in his financial review before we open the call up for questions. The company delivered solid second quarter results. Rental revenues increase 3%, sales revenues increased 14%, and adjusted EBITDA grew by 9%. Our mobile modular division continue to perform well with rental revenues increasing 10%. We realize growth in both our commercial and education sectors.

Joseph F. Hanna: Thank you, David. Good afternoon and thank you, everyone, for joining us on today's call. We are pleased to be together today and look forward to providing additional perspective on our results for the second quarter.

Joseph F. Hanna: Our mobile modular division continued to perform well, with rental revenues increasing 10%; we saw growth in both our commercial and education sectors. In our commercial business, we serve many market verticals, including commercial construction, government, industrial, and residential, to name a few. Our broad reach gives us a diversified base of clients that have a wide variety of space needs, which we are well suited to serve. On the education side, both modernization and enrollment growth drive rental rates. There continues to be a significant backlog of deferred work that districts are busy addressing in all of our markets.

Keith E. Pratt: I will start with some overall comments on the quarter, and Keith will provide additional detail in his financial review before we open the call up for questions.

Keith E. Pratt: The company delivered solid second quarter results. Rental revenues increased 3%, sales revenues increased 14%, and adjusted EBITDA grew by 9%.

Keith E. Pratt: Our mobile modular division continued to perform well with rental revenues increasing 10%.

Keith E. Pratt: We realize growth in both our commercial and education sectors.

Joseph Hanna: In our commercial business, we serve many market verticals including commercial construction, government, industrial, residential to name a few. Our broad reach gives us a diversified base of clients that have a wide variety of space needs, which we are well suited to serve. On the education side, both modernization and enrollment growth drove rentals. There continues to be a significant backlog of deferred work that districts are busy addressing in all of our markets. Funding is available, and project backlogs are health. Our teams continue executing efficiently in the field, and we are in our busy summer season with all cylinders firing to get jobs completed on time for our customers.

Speaker Change: In our commercial business, we serve many market verticals, including commercial construction, government, industrial, residential, to name a few.

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

Keith E. Pratt: On the education side, both modernization and enrollment growth drove rentals. There continues to be a significant backlog of deferred work that districts are busy addressing in all of our markets. Funding is available and project backlogs are healthy.

Joseph F. Hanna: Funding is available, and project backlogs are healthy. Our teams continue executing efficiently in the field, and we are in our busy summer season with all cylinders firing to get jobs completed on time for our customers. Modular sales revenues decreased 6% for the quarter, but we're up 11% year-to-date. Sales projects can be affected by timing, which we saw in play for this quarter. Our backlog for sales projects is very strong, and our strategy to provide customers with custom sales opportunities has been very positively received.

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

Joseph Hanna: Modular sales revenues decrease 6% for the quarter, but we're up 11% year to date. Sales projects can be affected by timing, which we saw in play for this quarter. Our backlog for sales projects is very strong, and our strategy to provide customers with custom sales opportunities has been very positively received. We remain confident in the future growth of this portion of the business. We continue to make progress with our other mobile modular growth initiatives, with growth in mobile modular plus and site-related services in the quarter. Our customers value the benefit of having their buildings arrive with additional amenities included in their rental contract, as well as the convenience of services provided on the outside of the building to make it completely ready for use.

Keith E. Pratt: Modular sales revenues decreased 6% for the quarter, but we're up 11% year-to-date.

Keith E. Pratt: Sales projects can be affected by timing, which we saw in play for this quarter. Our backlog for sales projects is very strong, and our strategy to provide customers with custom sales opportunities has been very positively received.

Joseph F. Hanna: We remain confident in the future growth of this portion of the business. We continue to make progress with our other mobile modular growth initiatives, with growth in Mobile Modular Plus and site-related services in the quarter. Our customers value the benefit of having their buildings arrive with additional amenities included in their rental contract as well as the convenience of services provided on the outside of the building to make it completely ready for use.

Keith E. Pratt: We remain confident in the future growth of this portion of the business.

Keith E. Pratt: We continue to make progress with our other mobile modular growth initiatives with growth in mobile modular plus and site related services in the quarter.

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

Joseph Hanna: We are gaining traction as each quarter passes, and customer acceptance has been positive. Our revenue per unit in mobile modular showed healthy gains for the quarter, with new shipment rates up nicely compared to the prior year. This momentum is a positive tailwind for overall fleet rates, which should increase as rental units cycle during normal business operations. At portable storage, rental revenues decreased 4%; specifically, commercial construction project activity has slowed, and we saw fewer shipments and higher returns year-over-year. Closer ratios are still very good, and we have been maintaining our pricing discipline despite softer market conditions.

Joseph F. Hanna: We are gaining traction as each quarter passes, and customer acceptance has been positive. Our revenue per unit in Mobile Modular showed healthy gains for the quarter, with new shipment rates up nicely compared to the prior year. This momentum is a positive tailwind for overall fleet rates, which should increase as rental units cycle during normal business operations. At portable storage, rental revenues decreased 4%.

Keith E. Pratt: We are gaining traction as each quarter passes and customer acceptance has been positive.

Keith E. Pratt: Our revenue per unit in Mobile Modular showed healthy gains for the quarter, with new shipment rates up nicely compared to the prior year.

Keith E. Pratt: This momentum is a positive tailwind for overall fleet rates, which should increase as rental units cycle during normal business operations.

Joseph F. Hanna: Specifically, commercial construction project activity has slowed, and we saw fewer shipments and higher returns year over year. However, close ratios are still very good, and we have been maintaining our pricing discipline despite softer market conditions. At TRS-Rentelco, rental revenues decreased by 11% year over year, reflecting industry-wide weakness in test and measurement equipment rentals. Both our general purpose and communications equipment rental revenues decreased for the quarter with the exception of wire

Keith E. Pratt: At portable storage, rental revenues decreased 4%.

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

Joseph Hanna: At TRS Rentalco, rental revenues decreased by 11% year-over-year, reflecting industry-wide weakness in test and measurement equipment rentals. Both are general purpose and communications equipment rental revenues decreased for the quarter, with the exception of wired communications rentals. Data center work and associated infrastructure to support projects were a bright spot. We continue to adjust for the softer market conditions. Our fleet cap-ax has been reduced, and we have been successfully selling idle equipment to adjust for less demand. We were fully focused on winning rental bookings and managing the fleet given tougher market conditions, and we'll continue to do so.

Speaker Change: At TRS-Rentelco, rental revenues decreased by 11% year-over-year, reflecting industry-wide weakness in test and measurement equipment rentals.

Speaker Change: Both our general purpose and communications equipment rental revenues decreased for the quarter, with the exception of wired communications rentals. Data center work and associated infrastructure to support projects were a bright spot.

Joseph F. Hanna: Data center work and associated infrastructure to support projects were a bright spot. We continued to adjust for the softer market conditions. Our fleet capex has been reduced, and we have been successfully selling idle equipment to adjust for less demand. We were fully focused on winning rental bookings and managing the fleet given tougher market conditions and will continue to do so. We continue to operate as an independent company notwithstanding the merger announcement with Will Scott Mobile Mini in January.

Speaker Change: We continued adjusting for the softer market conditions. Our flea capex has been reduced, and we have been successfully selling idle equipment to adjust for less demand.

Speaker Change: We were fully focused on winning rental bookings and managing the fleet given tougher market conditions and will continue to do so.

Joseph Hanna: We continue to operate as an independent company notwithstanding the merger announcement with Will Scott Mobile Mini in January. Our teams in the front office, in our production centers, and in the field continue to provide the exceptional service to our customers and each other. I've been impressed by the engagement and commitment shown by everyone during this period. Thank you for all your ongoing dedication and hard work.

Speaker Change: We continue to operate as an independent company, notwithstanding the merger announcement with Will Scott MobileMini in January .

Joseph F. Hanna: Our teams in the front office, in our production centers, and in the field continue to provide exceptional service to our customers and each other. I've been impressed by the engagement and commitment shown by everyone during this period. Thank you for all your ongoing dedication and hard work. On July 11th, our shareholders voted to approve the merger. Now that this significant milestone has passed, we are continuing to cooperate with the FTC in its analysis of the transaction.

Speaker Change: Our teams in the front office, in our production centers, and in the field continue to provide the exceptional service to our customers and each other. I've been impressed by the engagement and commitment shown by everyone during this period.

Speaker Change: Thank you for all your ongoing dedication and hard work.

Joseph Hanna: On July 11th, our shareholders voted to approve the merger. Now that the significant milestone has passed, we are continuing to cooperate with the FTC in their analysis of the transaction. During this time, we have plenty of work to do to deliver ongoing solid financial results for our shareholders. As stated last quarter, we will not be providing any financial guidance or future outlook.

Speaker Change: On July 11th, our shareholders voted to approve the merger. Now that this significant milestone has passed, we are continuing to cooperate with the FTC in their analysis of the transaction.

Joseph F. Hanna: During this time, we have plenty of work to do to deliver ongoing, solid financial results for our shareholders. As stated last quarter, we will not be providing any financial guidance or future outlook. Now, I turn the call over to Keith.

Speaker Change: During this time, we have plenty of work to do to deliver ongoing solid financial results for our shareholders. As stated last quarter, we will not be providing any financial guidance or future outlook.

Keith Pratt: Now, let me turn the call over to Keith. Thank you, Joe, and good afternoon, everyone. As Joe highlighted, we delivered solid results in the second quarter, driven by the performance of our mobile modular business. Looking at the overall corporate results for the second quarter, total revenues from continuing operations increased 5% to 212.6 million. At adjusted EBITDA, increased 9% to 83.7 million.

Speaker Change: Now, let me turn the call over to Keith.

Keith E. Pratt: Thank you, Joe, and good afternoon, everyone. As Joe highlighted, we delivered solid results in the second quarter, driven by the performance of our mobile modular business. Looking at the overall corporate results for the second quarter, total revenues from continuing operations increased 5% to $212.6 million, and Adjusted EBITDA increased 9% to $83.7 million. However, during the second quarter, the company incurred $12.4 million in transaction costs attributed to the pending merger with Will Scott Mobile Mini, negatively impacting earnings per diluted share by $0.36. Reviewing MobileModular's operating performance as compared to the second quarter of 2023.

Keith E. Pratt: Thank you, Joe, and good afternoon, everyone. As Joe highlighted, we delivered solid results in the second quarter, driven by the performance of our mobile modular business.

Keith E. Pratt: Looking at the overall corporate results for the second quarter, total revenues from continuing operations increased 5% to $212.6 million, and adjusted EBITDA increased 9% to $83.7 million.

Keith Pratt: During the second quarter, the company incurred 12.4 million in transaction costs attributed to the pending merger with Will Scott Mobile Mini, negatively impacting earnings per diluted share by 36 cents. Reviewing Mobile Modular's operating performance has compared to the second quarter of 2023. Mobile Modular had another impressive quarter, with adjusted EBITDA increasing 20% to 53.4 million. Total revenues increased 4% to 144.5 million, primarily driven by 10% higher rental revenues and 4% higher rental related services revenues, partly offset by a 6% decline in sales revenues. The sales revenues decrease was primarily due to lower new equipment sales.

Keith E. Pratt: During the second quarter, the company incurred $12.4 million in transaction costs attributed to the pending merger with Will Scott Mobile Mini, negatively impacting earnings per diluted share by $0.36.

Speaker Change: Reviewing MobileModular's operating performance as compared to the second quarter of 2023, MobileModular had another impressive quarter with adjusted EBITDA increasing 20% to $53.4 million.

Keith E. Pratt: Mobile Modular had another impressive quarter with adjusted EBITDA increasing 20% to $53.4 million. Total revenues increased 4% to $144.5 million, primarily driven by 10% higher rental revenues and 4% higher rental-related services revenues, partly offset by a 6% decline in sales revenue. The sales revenues decrease was primarily due to lower new equipment sales. However, we continued our disciplined fleet management on a larger fleet with 6% higher average rental equipment on rent and average fleet utilization of 78.4% compared to 79.3% a year ago. Rental margins were 60%, up from 54% a year ago, primarily because of rental revenue growth and lower inventory center costs. We continue to make progress delivering on our modular business strategy.

Speaker Change: Total revenues increased 4% to $144.5 million.

Speaker Change: primarily driven by 10% higher rental revenues and 4% higher rental related services revenues, partly offset by a 6% decline in sales revenues.

Speaker Change: The sales revenues decrease was primarily due to lower new equipment sales.

Keith Pratt: We continued our discipline fleet management on a larger fleet with 6% higher average rental equipment on rent and average fleet utilization of 78.4%, compared to 79.3% a year ago. Rental margins were 60% up from 54% a year ago, primarily because of rental revenues growth and lower inventory center costs.

Speaker Change: We continued our disciplined fleet management on a larger fleet with 6% higher average rental equipment on rent and average fleet utilization of 78.4% compared to 79.3% a year ago.

Speaker Change: Rental margins were 60% up from 54% a year ago, primarily because of rental revenues growth and lower inventory center costs.

Keith Pratt: We continued to make progress delivering on our modular business strategy. Second quarter monthly revenue per unit on rent increased 18% year over year to $793. For new shipment over the last 12 months, the average monthly revenue per unit increased 13% to $1,124. Progress with mobile modular plus is embedded in these data points and is an additional growth driver.

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

Keith E. Pratt: Second quarter monthly revenue per unit on rent increased 18% year over year to $793 for new shipments over the last 12 months. The average monthly revenue per unit increased 13% to $1,124. Progress with Mobile Modular Plus is embedded in these data points and is an additional growth driver. We continue to make progress with our modular services offering. For the second quarter, Mobile Modular Plus revenues increased to $7.5 million from $6.7 million a year earlier, and site-related services increased to $5.8 million, up from $5.7 million. Now, turning to the review of portable storage.

Speaker Change: Second quarter monthly revenue per unit on rent increased 18% year-over-year to $793.

Speaker Change: For new shipments over the last 12 months, the average monthly revenue per unit increased 13% to $1,124.

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

Keith Pratt: We continued to make progress with our modular services offerings. For the second quarter, Mobile Modular Plus revenues increased to $7.5 million from $6.7 million a year earlier. And cycle-related services increased to $5.8 million, up from $5.7 million.

Speaker Change: We continue to make progress with our modular services offerings.

Speaker Change: For the second quarter, Mobile Modular Plus revenues increased to $7.5 million, from $6.7 million a year earlier, and site-related services increased to $5.8 million, up from $5.7 million.

Keith Pratt: Turning to the review of portable storage, adjusted EBITDA with 11 million, a decrease of 11% compared to the prior year. During the quarter, we saw lower rental and rental-related services revenues. Demand conditions were weaker, primarily because of lower commercial construction project activity. Higher sales revenues partly offset rental weakness, resulting in a total revenue decrease of 6% to 24 million. Rental revenues for the quarter decreased 4% to 17.8 million, and rental margins were 86%, comparable to a year earlier. Average rental equipment on rent decreased 6%, while average utilization for the quarter was 66.1%, compared to 78.2% a year ago.

Keith E. Pratt: Adjusted EBITDA was $11 million, a decrease of 11% compared to the prior year. During the quarter, we saw lower rental and rental-related service revenue. Demand conditions were weaker, primarily because of lower commercial construction project activity; higher sales revenues partly offset rental weeks, resulting in a total revenue decrease of 6% to $24 million. Rental revenues for the quarter decreased 4% to $17.8 million, and rental margins were 86%, comparable to a year earlier. Average rental equipment on rent decreased 6%, while average utilization for the quarter was 66.1%, compared to 78.2% a year ago. Turning now to the review of TRS Rentelco.

Speaker Change: Turning to the review of portable storage, adjusted EBITDA was $11 million, a decrease of 11% compared to the prior year.

Speaker Change: During the quarter, we saw lower rental and rental-related services revenues.

Speaker Change: Demand conditions were weaker, primarily because of lower commercial construction project activity.

Speaker Change: Higher sales revenues partly offset rental weakness, resulting in a total revenue decrease of 6% to $24 million.

Speaker Change: Rental revenues for the quarter decreased 4% to $17.8 million, and rental margins were 86%, comparable to a year earlier.

Speaker Change: Average rental equipment on rent decreased 6%, while average utilization for the quarter was 66.1%, compared to 78.2% a year ago.

Keith Pratt: Turning now to the review of TRS-RENTELCO, adjusted EBITDA with 18 million, a decrease of 16% compared to last year. Total revenues decreased 5.2 million or 14% to 32.7 million. Rental revenues for the quarter decreased 11%, as the industry experienced continued and market weakness. Average utilization for the quarter was 56.5%, compared to 58.2% a year ago, and rental margins were 36%, compared to 38% a year ago. Sales revenues decreased 22% year over year, 25.8 million, with gross profit decreasing to 3.1 million.

Speaker Change: Turning now to the review of TRS Rentelco. Adjusted EBITDA was $18 million, a decrease of 16% compared to last year.

Keith E. Pratt: Adjusted EBITDA was $18 million, a decrease of 16% compared to last year. Total revenues decreased $5.2 million, or 14%, to $32.7 million. Rental revenues for the quarter decreased 11% as the industry experienced continued end market weaknesses.

Speaker Change: Total revenues decreased $5.2 million or 14% to $32.7 million.

Speaker Change: Rental revenues for the quarter decreased 11% as the industry experienced continued end-market weakness.

Keith E. Pratt: Average utilization for the quarter was 56.5% compared to 58.2% a year ago, and rental margins were 36% compared to 38% a year ago. Sales revenues decreased 22% year-over-year to $5.8 million, with gross profit decreasing to $3.1 million. To address the softer business conditions, we reduced new equipment capital spending, focused on sales of used equipment, and reduced fleet size based on the original cost of equipment to $368 million at the end of June.

Speaker Change: Average utilization for the quarter was 56.5% compared to 58.2% a year ago and rental margins were 36% compared to 38% a year ago.

Speaker Change: Sales revenues decreased 22% year-over-year to $5.8 million, with gross profit decreasing to $3.1 million.

Keith Pratt: To address the softer business conditions, we reduced new equipment capital spending, focused on sales of used equipment, and reduced fleet size, based on original cost of equipment to 368 million at the end of June.

Speaker Change: To address the softer business conditions, we reduced new equipment capital spending, focused on sales of used equipment, and reduced fleet size, based on original cost of equipment, to $368 million at the end of June .

Keith Pratt: The remainder of my comments will be on a total company basis from continuing operations. Second quarter selling and administrative expenses increased 14.3 million to 61.4 million. The increase was primarily the result of 12.4 million in transaction costs, incurred due to the pending merger with Will Scott Mobile Mini. Interest expense was 13 million, an increase of 3.1 million, as a result of higher average interest rates and higher average debt levels during the quarter. The second quarter provision for income taxes was based on an effective tax rate of 28.8%, compared to 25.7% a year earlier. The increase was primarily due to changes in business mix by state.

Keith E. Pratt: The remainder of my comments will be on a total company basis from continuing operations. Second quarter selling and administrative expenses increased $14.3 million to $61.4 million. The increase was primarily the result of $12.4 million in transaction costs incurred due to the pending merger with Will Scott Mobile Mini. Interest expense was $13 million, an increase of $3.1 million, as a result of higher average interest rates and higher average debt levels during the quarter.

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

Speaker Change: Second quarter selling and administrative expenses increased $14.3 million to $61.4 million. The increase was primarily the result of $12.4 million in transaction costs.

Speaker Change: incurred due to the pending merger with Will Scott Mobile Mini.

Speaker Change: Interest expense was $13 million, an increase of $3.1 million as a result of higher average interest rates and higher average debt levels during the quarter.

Keith E. Pratt: The second quarter provision for income taxes was based on an effective tax rate of 28.8% compared to 25.7% a year earlier. The increase was primarily due to changes in business mix by state. Turning to our year-to-date cash flow highlights, net cash provided by operating activities was $139 million, compared to $72 million in the prior year. Rental equipment purchases were $145 million, compared to $128 million in the prior year. In addition to continued investments in UFLEET, healthy cash generation allowed us to pay $23 million in shareholder dividends.

Speaker Change: The second quarter provision for income taxes was based on an effective tax rate of 28.8% compared to 25.7% a year earlier.

Speaker Change: The increase was primarily due to changes in business mix of state.

Keith Pratt: Turning to our year-to-date cash flow highlights, net cash provided by operating activities was $139 million, compared to $72 million in the prior year. Rentful equipment purchases were 145 million compared to 128 million in the prior year. In addition to continued investments in new fleet, healthy cash generation allowed us to pay 23 million and shareholder dividends. Proceeds from sales of property, plant, and equipment were 12 million. At quarter end, we had net borrowings of 794 million, comprised of 175 million outside standing, 544 million under our credit facility, and a term loan of 75 million. The ratio of funded debt to the last 12 months actual adjusted EBITDA was 2.43 to 1.

Speaker Change: Turning to our year-to-date cash flow highlights, net cash provided by operating activities was $139 million, compared to $72 million in the prior year.

Speaker Change: Rental equipment purchases were $145 million, compared to $128 million in the prior year. In addition to continued investments and new fleet, healthy cash generation allowed us to pay $23 million in shareholder dividends.

Keith E. Pratt: Proceeds from sales of property, plant, and equipment were $12 million. At quarter end, we had net borrowings of $794 million, comprised of $175 million outside standing, $544 million under our credit facility, and a term loan of $75 million. The ratio of funded debt to the last 12 months' actual adjusted EBITDA was 2.43 to 1.

Speaker Change: Proceeds from sales of property, plant, and equipment were $12 million.

Speaker Change: At quarter end, we had net borrowings of $794 million, comprised of $175 million notes outstanding, $544 million under our credit facility, and a term loan of $75 million.

Speaker Change: The ratio of funded debt to the last 12 months actual adjusted EBITDA was 2.43 to 1.

Keith Pratt: We are proud of McGrath's second quarter performance, and we are fully focused on solid execution for the remainder of the year.

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

Mcgrath: We are proud of McGrath's second quarter performance, and we are fully focused on solid execution for the remainder of the year.

Operator: That concludes our prepared remarks.

Operator: David, you may now open the lines for questions. I apologize for the technical delay. At this time, if you would like to ask a question, please press the star and one keys on your telephone keypad. Keep in mind that you may remove yourself from the question queue at any time by pressing star and two.

Mcgrath: That concludes our prepared remarks.

David: David, you may now open the lines for questions.

Operator: I apologize for the technical delay. At this time, if you would like to ask a question, please press the star and one keys on your telephone keypad. Keep in mind that you may remove yourself from the question queue at any time by pressing star and two. We'll take our first question from Scott Schneeberger on Oppenheimer. Please go ahead; your line is open.

David: I apologize for the technical delay. At this time, if you would like to ask a question, please press the star and one keys on your telephone keypad. Keep in mind that you may remove yourself from the question queue at any time by pressing star and two.

Scott Schneeberger: We will take our first question from Scott Schneeberger with Oppenheimer. Please go ahead. Your line is open.

Speaker Change: We'll take our first question from Scott Schneeberger with Oppenheimer. Please go ahead, your line is open.

Scott Schneeberger: Thanks very much.

Scott Andrew Schneeberger: Thanks very much. Good afternoon, Joe and Keith. I have a few, and I'm going to go around the segments a bit.

Scott Schneeberger: Good afternoon. Joan Keith, I have a few. I will go around the segments a bit. I will start with Modular. Could you speak to the two main business lines you serve: education and commercial? If you compare and contrast, first of all, you mentioned the highest rental backlog in company history. That was largely driven by education. Sounds like both education and commercial are up year over year. If you can just delve in a little bit more to that on the rental side.

Scott Andrew Schneeberger: Thanks very much. Good afternoon. Joe and Keith, I've got a few and I'm going to go around the segments a bit. I'll start with Modular. Could you speak to the two main business lines you serve?

Scott Andrew Schneeberger: I'll start with Modular. Could you speak to the two main business lines you serve? Education and Commercial. Just so you can compare and contrast, the first quarter you mentioned the highest rental backlog in company history, and that was largely driven by education. Sounds like both education and commercial are up year over year. If you can just delve in a little bit more on that on the rental side.

Speaker Change: education and and commercial.

Speaker Change: Just if you can compare and contrast, first quarter you mentioned the highest rental backlog.

Speaker Change: And that was largely driven by education. Sounds like both education and commercial are up year over year. If you can just delve in a little bit more to that on the rental side. Thanks.

Scott Schneeberger: Thanks.

Joseph F. Hanna: Sure, Scott, you're correct. Both education and commercial were up. Commercial construction was up 14%, and education was up 6%. So, we, you know, even though commercial construction has been a little bit softer, as we've highlighted from the portable storage business, we were seeing, you know, good results from government and private industry, health care, things like that, which have offset that a little bit. And, you know, we've been pleased with the progress that we have made. And, again, our rental backlogs have been very good. The backlog is 24% higher from a year ago. And so, that's good.

Joseph Hanna: Sure. Scott, you are correct. Both education and commercial were up. Commercial was up 14 percent, and education was up 6 percent. Even though commercial construction has been a little bit softer, as we have highlighted from the portable storage business, we were seeing good results from government and private industry health care, things like that, which have offset that a little bit. We have been pleased with the progress that we made. Again, our rental backlogs have been very good. The backlog is 24 percent, up from a year ago. That is good.

Speaker Change: Sure, Scott, you're correct. Both education and commercial is up. Commercial is up 14%.

Speaker Change: and education was up 6%. So we, you know, even though commercial construction has been a little bit softer, as we've highlighted from the portable storage business.

Speaker Change: We were seeing

Speaker Change: you know, good results from government.

Speaker Change: and private industry, health care, things like that, which have...

Speaker Change: offset that a little bit and, you know, we've been pleased with the progress that we made.

Speaker Change: And again, our rental backlogs have been...

Speaker Change: Very good. The backlog is 24% up from a year ago.

Joseph Hanna: On the education side, the continuing lack of sufficient funding and school districts to do all the work that they need to do to fix decrepit facilities is just continuing. Funding is there, but it is never enough. That is just a continuing cycle of opportunity for us, and it is happening in virtually all the regions that we operate in. In areas like Florida, where there is continued student population growth, we are also seeing districts that just can't keep up. They open a school, and it just doesn't have enough room. They need rental buildings, and we are there to provide them for them.

Joseph F. Hanna: And on the education side, the continuing, you know, lack of sufficient funding in school districts to do all the work that they need to do to fix decrepit facilities is just continuing. Funding is there, but it's never enough. And so, that's just a continuing cycle of opportunity for us, and it's happening in virtually all the regions that we operate in. In areas like Florida, where there's continued student population growth, we're also seeing districts that just can't keep up.

Speaker Change: And so that's good. And on the education side, the continuing, you know,

Speaker Change: lack of

Speaker Change: Sufficient funding in school districts.

Speaker Change: to do all the work that they need to do to fix.

Speaker Change: Decrepit facilities, it's just continuing, funding is there, but it's never enough, and so that's just a continuing cycle of opportunity for us.

Speaker Change: and it's happening in virtually all the regions that we operate in.

Speaker Change: In areas like Florida, where there's continued student population growth, we're also seeing districts that just can't keep up. And so, you know, they open a school and it just doesn't have enough room, they need rental buildings, and we're there to provide them for them.

Joseph F. Hanna: And so, you know, they open a school, and it just doesn't have enough room. They need rental buildings, and we're there to provide them for them. So, that has been in play for this quarter for us.

Joseph Hanna: That has been in play for this corner for us. Joe, just following up on that, that you said six commercial, up 14%; education up six. I would have thought education up bigger, but is that just because we're in the second quarter and the real big activity occurs. You have a big backlog there, but the real big activity would occur more so in the third quarter. Is that why that one was not actually stronger on the print? Yeah, that's a great point, and yes, you are correct.

Speaker Change: That has been in play for this quarter for us.

Scott Andrew Schneeberger: Joe, just following up on that, you said commercial up 14%, and education up 6%. I would have thought education up more, but is that just because we're in the second quarter and the real big activity occurs? You have a big backlog there, but the real big activity would occur more so in the third quarter.

Speaker Change: Joe, just following up on that that you said six commercial up 14%

Joseph F. Hanna: EducationUp 6. I would have thought EducationUp bigger, but is that just because we're in the second quarter and the real big activity occurs? You have a big backlog there, but the real big activity would occur more so in the third quarter. Is that why that one was not actually stronger on the print?

Scott Andrew Schneeberger: Is that why that one was not actually stronger in the print?

Joseph F. Hanna: That's a great point, and yes, you are correct. The third quarter is typically our best quarter for education and the fourth quarter.

Joseph Hanna: Third quarter is typically our best quarter for education and fourth quarter. Thanks, appreciate that. Yeah, just a sense on the commercial side, you hit on it a little bit, but I want to ask, you know, are the super bar like mega projects and particularly large projects carrying the day. I imagine in modular, you might have some softness on the smaller projects due to the interest rate sensitivity. And I'm going to ask a similar question on storage in a minute, but just curious what you're seeing large and small customers in in modular and any other breakout you care to share.

Speaker Change: That's a great point and yes, you are correct. Third quarter is typically our best quarter for education and fourth quarter.

Scott Andrew Schneeberger: Thanks, I appreciate that. Just a sentence on the commercial side. You hit on it a little bit, but...

Speaker Change: Thanks, appreciate that.

Speaker Change: Just a sentence on the commercial side,

Scott Andrew Schneeberger: I want to ask, are the super large, like mega projects and particularly large projects, carrying the day? I imagine in modular, you might have some softness on the smaller projects due to the interest rate sensitivity. And I'm going to ask a similar question on storage in a minute, but just curious what you're seeing, large and small customers in modular, and any other breakout you care to share that would be insightful with regard to the end markets. Yeah, Scott.

Speaker Change: I want to ask, you know, is...

Speaker Change: are the super large mega projects and particularly large projects.

Speaker Change: Carrying the day, I imagine in modular you might have some softness on the smaller projects due to the interest rate sensitivity, and I'm going to ask a similar question on storage in a minute, but just curious what you're seeing large and small customers in modular and any other breakout you care to share that would be insightful with regard to the end markets being served.

Joseph Hanna: That would be insightful with regards to end markets being served. Yeah, Scott, you're absolutely right. It's the smaller projects that are associated with commercial construction that we've seen less of, and it's due to exactly what you said. It's higher construction cost, interest rate issues that have precluded the start of some of those projects, but the mega projects and large infrastructure projects that we've been involved with and continue to be involved with have been there. And we definitely are seeing that as a continuing rental demand issue for us. And so we're, you know, we're right there for those projects, and we're glad to be part of them, and they're continuing very nicely.

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

Speaker Change: Yeah, Scott, you're absolutely right. It's the smaller projects that are associated with commercial construction that we've seen less of, and it's due to exactly what you said.

Speaker Change: Higher construction costs, interest rate issues that have precluded the start of some of those projects. But the mega projects and large infrastructure projects that we've...

Speaker Change: have been involved with, and continue to be involved with, have been there. And we definitely are seeing that as a continuing rental demand issue for us.

Scott Schneeberger: Thanks. Joe, just to clarify something you said a moment earlier, did you say in commercial, the backlog was up 24% year over year in this quarter? No, that's overall modulars overall. Yeah, overall, correct. And I would assume that's heavier way to education and commercial, but good in both. Is that the right way to think about it? I think that's accurate. Yes.

Scott Andrew Schneeberger: Thanks. Joe, just to clarify something you said a moment earlier, did you say in the commercial that the backlog was up 24% year over year?

Speaker Change: Thanks. Joe, just to clarify something you said a moment earlier, did you say in commercial the backlog was up 24% year-over-year in this quarter? No, that's overall modulars. Overall? Yeah, overall. Correct. And I would assume that's heavier-weighted to education than commercial, but good in both? Is that the right way to think about it?

Joseph F. Hanna: No, that's overall modularity. Overall. Yeah, overall. Correct. And I would assume that it's heavier weighted to education than commercial, but good in both? Is that the right way to think about it? I think that's accurate, yes.

Scott Schneeberger: OK, just wrapping up on modular. I'm curious about shipments or even quoting activity, which is a little bit more of a leading indicator, but you and keep spoke to shipments on the call. Just that ties into that backlog, but how are you? How does it look there for you and your deliveries, your shipments? Sure. Our quoting levels have been quite strong, and they were up 14% on a year-over-year basis. So we've been very pleased with how that's panned out so far for the year. Shipments were comparable about two a year ago. And so, you know, with strong quoting activity, that usually means future shipments for us.

Scott Andrew Schneeberger: Okay, just finishing up on modular, I'm curious about shipments or even quoting activity, which is a little bit more of a leading indicator, but you and Keith spoke about shipments on the call. That ties into that backlog, but how does it look there for you in your deliveries and shipments?

Speaker Change: I think that's that's accurate, yes.

Speaker Change: shipments or even quoting activity which is a little bit more of a leading indicator but you you and Keith spoke to shipments on the call just

Speaker Change: That ties into that backlog, but how are you, how does it look there for you in your deliveries, your shipments?

Joseph F. Hanna: Sure, our quoting levels have been quite strong, and they were up 14% on a year-over-year basis, so we've been very pleased with how that's panned out so far for the year. Shipments were comparable about a year ago, and so, you know, with strong quoting activity, that usually means future shipments for us, and, you know, I think that that'll pan out.

Speaker Change: Sure, our quoting levels have been quite strong, and they were up 14% on a year-over-year basis. So we've been very pleased with how that's panned out so far for the year. Shipments were comparable about to a year ago, and so, you know, with...

Speaker Change: With strong quoting activity, that usually means future shipments for us, and I think that will pan out as the year progresses, so we're happy to see that.

Scott Schneeberger: And you know, I think that that'll pan out as the year progresses. So we're happy to see that. In that answer, was that commercial alone, or was that modular overall, the way you talked about it? Modular overall. Overall modular, correct. Thanks, and then my last one in module, or just the pricing environment. I heard what Keith mentioned about and see it on your slide. Slide 24, for instance, your shipments, the pricing is up 13% in the last 12 months, and that sounds strong. What are you seeing for the pricing environment out there, looking out over the balance of the year?

Scott Andrew Schneeberger: And that answer, was that commercial alone, or was it modular overall, the way you described it? Modular overall. Overall modular, correct. Thanks.

Speaker Change: And that answer, was that commercial alone or was that modular overall? Modular overall. Overall modular.

Scott Andrew Schneeberger: And then my last one in the module, which is the pricing environment. I heard what Keith mentioned and see it on your slide, slide 24, that, for instance, your shipments, the price is up 13% in the last 12 months, and that sounds strong. What are you seeing for the pricing environment out there looking out over the balance of the year?

Speaker Change: Thanks. And then my last one in modular, just the pricing environment. I heard what Keith mentioned about and see it on your slide.

Speaker Change: Slide 24, that for instance...

Speaker Change: Your shipments, the pricing is up 13% in the last 12 months, and that sounds strong. What are you seeing for the pricing environment out there looking out over the balance of the year?

Joseph Hanna: It's been healthy, and we've been able to really increase the revenue per unit based on the mobile modular plus that we're providing for our customers, and also modest pricing increases, too. So you combine those two things together; our revenue per unit has gone up very nicely. We're happy to see that.

Joseph F. Hanna: It's been healthy, and we've been able to really increase the revenue per unit based on the Mobile Modular Plus that we're providing for our customers and also modest price increases too. So, you combine those two things together, and our revenue per unit has gone up very nicely. We're happy to see that.

Speaker Change: It's been it's been healthy and you know we've we've been able to

Speaker Change: really increase the revenue per unit based on the Mobile Modular Plus that we're providing for our customers and also modest pricing increases too. So you combine those two things together, our revenue per unit has gone up very nicely. We're happy to see that.

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

Joseph Hanna: Thanks, and I'm going to segue over to the portable storage segment now. I guess let's just go with pricing, because we were talking about it. It sounds like you're holding the line and still have solid pricing, although volumes are off, which I'll ask about next. But could you just speak to the pricing integrity that you're experiencing? Yeah, I think that's accurate. We are; our preference is to hold pricing, and that's what our teams have been doing, and they've been doing a very nice job of it. And so we've been happy to see that there is good industry discipline there, and we're going to continue to try to maintain pricing wherever we can.

Speaker Change: Thanks and I'm going to segue over to the to the portable storage segment now.

Joseph F. Hanna: Yeah, I think that's accurate. Our preference is to hold prices, and that's what our teams have been doing, and they've been doing a very nice job of it. And so we've been happy to see that there is good industry discipline there, and we're going to continue to try to maintain prices wherever we can. Keep in mind, too, that we are also putting additional services inside of our containers, which is helpful in terms of overall revenue per unit for our portable storage business, too. So that has an impact on overall pricing in a positive way.

Speaker Change: I guess, integrity that you are experiencing.

Speaker Change: Yeah, I think that's accurate. We are...

Speaker Change: Our preference is to hold pricing.

Speaker Change: And that's what our teams have been doing, and they've been doing a very nice job of it. And so, you know, we've been happy to see that there, you know, is good industry discipline there. And, you know, we're going to continue to try to maintain pricing wherever we can.

Scott Schneeberger: Keep in mind, too, that we are also putting additional services inside of our containers, which is helpful on overall revenue per unit for our portable storage business, too. So that's an impact on overall pricing in a positive way. Thanks, understood.

Speaker Change: Keep in mind, too, that we are also...

Speaker Change: Um...

Speaker Change: Putting additional services inside of our containers, which is helpful on overall revenue per unit for our portable storage business, too.

Scott Andrew Schneeberger: Thanks, understood. And then just swinging it on portable storage volumes, it just sounds like commercial construction, a little more exposure there to rate-sensitive projects, but anything else to add there? I assume that's the answer, but if you could just take it a little bit more broadly, please.

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

Scott Schneeberger: And then just swinging it on portable storage to volumes. This sounds like commercial construction, a little more exposure there to rate sensitive projects, but anything else to add there? I assume that's the answer, but if you can just take it a little bit more broadly, please, thanks. Yeah, I think that's accurate. Overall, that business has the most exposure to commercial construction, and that's where we've seen the weakness. It's a lot of smaller projects that we've talked about earlier that were not as many starts in the first half of the year, and as projects rolled off, we've gotten returns that were a little bit higher than what we had planned.

Speaker Change: Thanks, understood. And then just swinging it on on portable storage to volumes, it just sounds like commercial construction, a little more exposure there to rate sensitive projects, but anything else to add there? I assume that's the answer, but if you could just take it a little bit more broadly please, thanks.

Joseph F. Hanna: Yeah, I think that's accurate. You know, overall, that business has the most exposure to commercial construction, and that's where we've seen the weakness. It's a lot of smaller projects that we talked about earlier that didn't get as many starts in the first half of the year. And as projects rolled off, we got returns that were a little bit higher than what we had planned. And so that's overall affected our revenues for the business. But I think, really fundamentally, that's where the softness is. That's the softness we're seeing in that business.

Speaker Change: Yeah, I think that's accurate. Our, you know, overall, that business has the most exposure to commercial construction. And that's where we've seen the weakness. There's, there's,

Speaker Change: It's a lot of smaller projects that we've talked about earlier that were not as many starts in the first half of the year and as projects rolled off.

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

Speaker Change: We've gotten returns that were a little bit higher than what we had planned. And so that's, you know, overall affected our revenues for the business. But I think, you know, really fundamentally that's where the softness, that's the softness we're seeing in that business.

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

Scott Schneeberger: And I guess the last one in this segment, just the quoting in the shipments, that question again, just to get a sense of lead indicator, are we getting near a bottom there? Are we bouncing along the bottom? Just what's the more quoting activity, less quoting activity, just where are you getting a sense of from the customers? Yeah, quoting activity is down in that business, but when you look at some of the indicators that we see out there, like the construction backlog indicator as an example, which really focuses on commercial construction starts, that actually has been on a slight uptick.

Speaker Change: And I guess the last one in this segment, just the quoting and the shipments, that question again, just to get a sense of lead indicator, are you, you know, are we getting near a bottom there? Are we bouncing along a bottom?

Speaker Change: Just what's the more quoting activity, less quoting activity, just what are you getting a sense of from the customers? Thanks.

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

Speaker Change: Yeah, quoting activity is down in that business, but you know when you look at some of the indicators that we see out there like the

Speaker Change: construction backlog indicator as an example which really you know focuses on commercial construction starts

Joseph Hanna: It's not where it was last year, but for this year, it's below where it was last year, but it's still on a slight uptick. So when I look at that, I see conditions that are not deteriorating in a significant way. So I'm hopeful, and we believe that we could be in a trough situation here. I'm just not seeing any significant macroeconomic issues that are really going to continue to have this part of the business on a downward trajectory. I believe with the potential to cut interest rates here that could happen in the second half, that's also could be a positive demand driver in that business.

Speaker Change: That actually has been on a slight uptick. It's not where it was last year.

Speaker Change: But for this year, it's below where it was last year, but it's still on a slight uptick.

Scott Andrew Schneeberger: So we're not, when I look at that, I see, you know, conditions that are not deteriorating in a significant way. So I'm hopeful, and we believe that, you know, we could be in a trough situation here. I'm just not seeing any significant macroeconomic issues that are really going to continue to have this part of the business on a downward trajectory. I believe, you know, with the potential to cut interest rates here that could happen in the second half, that could also be a positive demand driver for that business.

Speaker Change: When I look at that, I see...

Speaker Change: you know, conditions that are not deteriorating in a significant way. So I'm hopeful and we believe that, you know, we could be in a trough situation here. I'm just not seeing any.

Speaker Change: significant macroeconomic issues that are really going to continue to have this part of the business on a downward trajectory. I believe you know with the

Speaker Change: Potential to cut interest rates here that could happen in the second half.

Joseph Hanna: And the other thing too is that we have a retail business typically in the second half of the year that is good for us, and that hasn't really kicked in yet. So I'm overall positive that we're not going to see any significant deterioration there.

Scott Andrew Schneeberger: So I just, and the other thing, too, is that we have a retail business, typically in the second half of the year, that is good for us, and, you know, that hasn't really kicked in yet. I'm, you know, overall positive that we're not going to see any significant deterioration there.

Speaker Change: that's also could be a positive demand driver in that business. So I just, and the other thing too is that we have a retail business.

Speaker Change: typically in the second half of the year that is good for us.

Speaker Change: And, you know, that hasn't really kicked in yet, so I'm, you know, overall positive that we're not going to see any significant deterioration there.

Scott Schneeberger: All right, thanks.

Scott Andrew Schneeberger: Thanks Joe. Just a couple more, and I appreciate you allowing me this time. In TRS, just you know, two important business lines of yours are the semiconductor business and then the 4G to 5G transition. If you could just comment on trends you're seeing in both of those. Thanks.

Scott Schneeberger: So just a couple more, and I appreciate you all along this time. In TRS, just two important business lines of years are semiconductor business and then 4G to 5G transition. If you could just comment on trends you're seeing in both of those, thanks. Yeah, what we've shared in last quarter was our computer and semiconductor business had just been slow, and that's reflective of things that are taking place within that industry in tell as an example, you know, under massive reorganization internally. And so there just aren't as many projects that are taking place in that business, and we're seeing that trend continue.

Speaker Change: Alright, thanks Joe. Just a couple more and I appreciate you allowing me this time. In TRS, just, you know, two important business lines of yours are semiconductor business and then 4G to 5G transition. If you could just comment on trends you're seeing in both of those. Thanks.

Joseph F. Hanna: Yeah, what we shared in last quarter was our computer and semiconductor business has just been slow, and that's reflective of things that are taking place within that industry, Intel, as an example, under massive reorganization internally. And so there just aren't as many projects that are taking place in that business, and we're seeing that trend continue. And so if you switch over to the communication side, the wireless portion of the business, and the 5G activity that has taken place in the field, we're just not seeing as much of it as we have in the past.

Speaker Change: Yeah, what we've shared in the last quarter was our computer and semiconductor business has just been slow and that's reflective of things that are taking place within that industry. Intel as an example, you know, under massive reorganization internally and so there just aren't as many projects that are taking place in that business and we're seeing that trend continue.

Joseph Hanna: And so if you look at switch over to the communication side, the wireless portion of the business and the 5G activity that has taken place in the field, we're just not seeing as much of it as we have in the past. The carriers are not as aggressively upgrading to 5G networks in the field. So we're not seeing as much activity there, but on the wired side, we're seeing quite a bit, and that's associated with data centers and all the work and backhaul and everything that is associated with putting a data center in place. A lot of that work is going on, and so that was a positive impact for us for the quarter.

Speaker Change: And so, if you look at, switch over to the communication side.

Speaker Change: the wireless portion of the business.

Speaker Change: and the 5G activity that has taken place in the field. We're just not seeing as much of it as we have in the past. The carriers are not as aggressively...

Joseph F. Hanna: The carriers are not as aggressively upgrading to 5G networks in the field, so we're not seeing as much activity there. But on the wired side, we're seeing quite a bit, and that's associated with data centers and all the work and backhaul and everything that is associated with putting a data center in place. A lot of that work is going on, and so that was a positive impact for us for the quarter.

Speaker Change: upgrading to 5G networks.

Speaker Change: in the field, so we're not seeing as much activity there.

Speaker Change: But on the wired side, we're seeing quite a bit, and that's associated with data centers and all the work and backhaul and everything that is associated with putting a data center in place. A lot of that work is going on, and so that was a positive impact for us for the quarter. But overall,

Joseph Hanna: But overall, you know, we're seeing in that business, our trends are typically not off from what we're seeing from our OEMs that we buy from. Keysight, as an example, and other OEMs, you know, have reported softness in their sales, and we're seeing the same thing. So we're confident that we're not giving up any market share, losing customers, anything like that. And that we're maintaining our discipline with pricing in the market. And, you know, we just need to get through this trough that we're in at this point. And just following real quick on the 5G part, that slow down, is that a cyclical thing or is that a secular thing that you're sensing?

Joseph F. Hanna: But overall, you know, we're seeing in that business; our trends are typically not off from what we're seeing from our OEMs that we buy from. Keysight, for example, and other OEMs, you know, have reported softness in their sales, and we're seeing the same thing. And so we're confident that we're not giving up any market share, losing customers, anything like that, and that we're maintaining our discipline with pricing in the market. And you know, we just need to get through this trough that we're in at this point.

Speaker Change: You know, we're seeing in that business, our trends are typically...

Speaker Change: not off from what we're seeing from our OEMs that we buy from.

Speaker Change: Keysight, as an example, and other OEMs have reported softness in their sales.

Speaker Change: And we're seeing the same thing, and so we're confident that we're not giving up any market share, losing customers, anything like that.

Speaker Change: and that we're maintaining our discipline with pricing in the market. And, you know, we just need to get through this trough that we're in at this point.

Scott Andrew Schneeberger: And just following real quick on the 5G part, that slowdown, is that a cyclical thing, or is that a secular thing that you're talking about?

Speaker Change: And just following real quick on the on the 5G part, that slowdown, is that a cyclical thing or is that a secular thing that you're sending?

Joseph F. Hanna: I don't think it's cyclical; I think it's secular. There's just not as much activity taking place in the field, and you know we are. The contractors that we work with that do that work just aren't as busy.

Joseph Hanna: I don't think it's cyclical; I think it's secular. There's just not as much activity taking place in the field, and the contractors that we work with that do that work just aren't as busy.

Speaker Change: I don't think it's cyclical, I think it's secular.

Speaker Change: There's just not as much activity taking place in the field, and the contractors that we work with that do that work just aren't as busy.

Joseph Hanna: Okay, and any lead that's the last one, and then I have a final on regulatory. But anything that gives you a sense we could see that turn in the TRF segment, or is it kind of like how you answered portable storage? Kind of sounds like bouncing along the bottom and looking for indicators. I think we're bouncing along the bottom. I will say that our, you know, we monitor our rental bookings, obviously quite closely, and for the month of July, our rental bookings have been consistently stronger on a daily basis, and our billing rate is on an upward trend.

Scott Andrew Schneeberger: Okay, and any, that's the last one, and then I have a final on regulatory, but anything that gives you a sense we could see that turn in the TRS segment, or is it kind of like how you answered portable storage sounds like bouncing along the bottom and looking for indicators?

Speaker Change: Okay, and any, that's the last one and then I have a final on regulatory, but anything that gives you a sense we could see that turn in the TRS segment or is it kind of like how you answered portable storage kind of sounds like bouncing along the bottom and looking for indicators?

Joseph F. Hanna: I think we're bouncing along the bottom. I will say that we monitor our rental bookings quite closely, and for the month of July, our rental bookings have been consistently stronger on a daily basis, and our billing rate is on an upward trend. It's not significant, but it's not deteriorating. It's on an upward trend, so we're very glad to see that taking place, and that gives me a positive feeling now for the rest of the year.

Speaker Change: I think we're bouncing along the bottom. I will say that our...

Speaker Change: Um...

Speaker Change: You know, we monitor our rental bookings, obviously, quite closely.

Speaker Change: And for the month of the July , our rental bookings have been consistently...

Joseph Hanna: It's not significant, but it's not deteriorating; it's on an upward trend, so we're very glad to see that taking place, and that gives me, you know, a positive feeling now for the rest of the year. Thanks, Joe.

Speaker Change: stronger on a daily basis and our billing rate is on an upward trend. It's not significant, but it's not deteriorating. It's on an upward trend, so we're very glad to see that taking place and that gives me, you know, a positive feeling now for the rest of the year.

Scott Andrew Schneeberger: Thanks Joe. And then lastly, just on the FTC front with the pending acquisition by Will Scott and Old Mini, I saw some things in the queue. It didn't seem like any meaningful new information, just that you're not permitted to close the transaction before September 27th, but it didn't sound, I mean, it sounds like we're just still waiting on them to continue to research the situation. Is that the appropriate way to look at it, or is there a meaningful update there? And then it seems there's something with the State's Attorney General. Could you comment on that too? Thanks.

Scott Schneeberger: And then lastly, just on the FTC front with the, depending, acquisition by Will Scott and a little mini, I saw just some things in the, in the queue. It didn't seem like any meaningful new information, just, you're not permitted to close the transaction before September 27. But it didn't sound, I mean, it sounds like we're just still waiting on them to continue to research the situation. And is that the appropriate way to look at it, or is there, is there a meaningful update there, and then seems there's something with state attorney general, could you comment on that too, thanks.

Speaker Change: Thanks Joe. And then lastly, just on the FTC front with the pending acquisition by Will Scott and Old Mini, I saw just some things in the

Speaker Change: Q. It didn't seem like any meaningful new information, just you're not permitted to close the transaction before September 27th.

Speaker Change: It sounds like we're just still waiting on them to continue to research the situation. Is that the appropriate way to look at it, or is there a meaningful update there?

Speaker Change: Seems there's something with State's Attorney General, could you comment on that too, thanks.

Keith Pratt: Yes, Scott, you've read the 10-Q correctly; both ourselves and Will Scott agreed to extend the time available to the FTC to review the transaction and agreed not to close before September 27. And then it's customary in situations like this that certain state attorneys general may want to review the transaction as well, so ours is subject to some similar review. Thanks, Keith.

Keith E. Pratt: Yes, Scott, you've read the TANQ correctly. Both ourselves and Will Scott agreed to extend the time available to the FTC to review the transaction and agreed not to close before September 27th. And then it's customary in situations like this that certain state attorney generals may want to review the transaction as well. So ours is subject to some similar review.

Speaker Change: Yes, Scott, you've read the TANQ correctly. Both ourselves and Will Scott agreed to extend the time available to the FTC to review the transaction and agreed not to close before September 27th.

Speaker Change: And then it's customary in situations like this that certain state attorney generals may want to review the transaction as well. So ours is subject to some similar review.

Scott Andrew Schneeberger: Thanks Keith. And just a final follow-up on that, does that mean that we're probably not going to hear from the FTC in their process until September, or is that just legal wording, and there's a chance we could hear?

Scott Schneeberger: And just a final follow-up on that. Does that mean that we're probably not going to hear from the FTC in their process until September, or that's just, that's just legal wording and there's a chance we get here sooner. Yeah, we really can't speculate on, you know, when the FTC will be complete with its work. Okay, all right.

Speaker Change: Thanks Keith, and just a final follow-up on that, does that mean that we're probably not going to hear from the FTC in their process until September or that's just that's just legal wording and there's a chance we get here sooner?

Keith E. Pratt: Yeah, we really can't speculate on, you know, when the FTC will be complete with its work. All right.

Speaker Change: Yeah, we really can't speculate on, you know, when the FTC will be complete with its work.

Scott Andrew Schneeberger: Okay, well guys, thanks for all this time, I really appreciate it; I'll turn it over.

Scott Schneeberger: Well, guys, thanks for all this time. Really appreciate it. I'll turn it over.

Speaker Change: Okay. All right. Well, guys, thanks for all this time. Really appreciate it. I'll turn it over.

Marc Riddick: We'll take our next question from Mark Riddick with Sedotti. Please go ahead. Your line is open.

Operator: We'll take our next question from Marc Riddick with Sidoti. Please go ahead, your line is open.

Speaker Change: We'll take our next question from Marc Riddick with...

Marc Riddick: How are you doing?

Speaker Change: Sidoti. Please go ahead, your line is open.

Marc Frye Riddick: Good evening.

Marc Frye Riddick: So I wanted to touch a little bit on sort of where we are with the growth initiatives and maybe sort of how you're positioned there as far as modular plus and site-related services certainly have moved nicely. I was wondering if you could talk a little bit about maybe how you're positioned or what you may need for the remainder of the year given the demand environment. Should we be looking for additional hiring, or are there other things that you need to sort of support that growth as we get through the remainder of the year?

Speaker Change: I'm Marc. I'm Marc.

Marc Frye Riddick: So I wanted to touch a little bit on sort of where we were with the growth initiatives and maybe sort of how you are positioned there as far as modular plus and site related services certainly have moved nicely. I was wondering if you could talk a little bit about maybe how you are positioned or what you may need for the remainder of the year given the demand environment. Should we be looking for additional hiring, or are there other things that you need to sort of support that growth as we get to the remainder of the year?

Joseph F. Hanna: I think we're pretty well situated internally with the resources that we have to meet future demand and so it's just a matter of, you know, having the Salesforce do their jobs effectively and provide the Mobile Modular Plus services to our customers. We're highly focused on that and I think we're, you know, set to do a good job there. As far as site-related services go, we're also, you know, looking for any and all opportunities to provide that service to our customers and those projects sometimes are, you know, they're more lumpy than what we see with Mobile Modular Plus and so you'll see, especially if we have a larger project that we close in a given quarter, so you'll see sometimes those revenues might go up at varying levels, but we feel we have the infrastructure and the training, the team, everything in place to be able to do that.

Speaker Change: I think we're pretty well situated internally with the resources that we have.

Speaker Change: to meet future demand.

Speaker Change: It's just a matter of, you know, having the sales force.

Speaker Change: do their jobs effectively and provide.

Speaker Change: The Mobile Modular Plus services to our customers, we're highly focused on that and I think we're

Speaker Change: you know, set to do a good job there. As far as site-related services go, we're also, you know, looking for any and all opportunities to...

Speaker Change: provide that service to our customers, and those projects sometimes are more lumpy than what we see with Mobile Modular Plus. And so you'll see, especially if we have a larger project,

Speaker Change: that we close in a given quarter, so you'll see sometimes those revenues might go up at varying levels. But we feel we have the infrastructure and the training, the team, everything in place to be able to do that effectively.

Marc Frye Riddick: Okay, and then you touch on... I'm sorry, go ahead. You probably, yeah, you probably recall the most.

Speaker Change: Okay, and then you touch on...

Speaker Change: You probably recall the Mobile Modular Plus, think of that as attaching additional items to the contract for the building, and that then becomes part of the recurring revenue stream. And as Joe pointed out on the site-related services, think of that as really one time, typically at the time the unit is set up at the beginning of the contract.

Joseph F. Hanna: So that can be more lumpy. It's really tied to activations. Some of those projects are fairly large, so you'll see some of the comps can move around a little bit, but year-to-date in both areas, making good progress.

Marc Frye Riddick: Okay, great. And then, in the commentary around education, it seems as though there's the seasonal timing involved, but the demand certainly is still there, and especially given the fact that it's going up against fairly – certainly not easy – comparisons. I was wondering if you could talk a little bit about if you're seeing anything in particular regional – are there any pockets of regional strength that are worth calling out?

Speaker Change: Okay great and then it seems as though in the commentary around education it seemed as though there's the seasonal timing and involved but the demand certainly is still there and especially given the fact that it's

Speaker Change: going up against Fairleigh.

Speaker Change: I was wondering if you could talk a little bit about if you're seeing anything in particular regional. Are there any pockets of regional strength that are worth calling out? And then sort of as a follow-up on top of that, there's always kind of the...

Marc Frye Riddick: And then, sort of as a follow-up on top of that, there's always kind of the thought process around the timing of funding initiatives and things that may be on the ballot coming up for November and, in some cases, September. Maybe you could talk a little bit about are there any areas that we should be looking for for potential funding changes?

Speaker Change: thought process around the timing of funding initiatives and things that may be on the ballot coming up for November , and in some cases September , maybe. Maybe you could talk a little bit about, are there any areas that we should be looking for for potential funding changes?

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

Speaker Change: Yeah, regarding funding, I don't see any significant changes in the public's acceptance of putting local bonds on the ballot to help with education facility projects.

Speaker Change: You know, most parents know the condition of schools, and they want their kids to go to a school that's got good infrastructure.

Marc Frye Riddick: And so they've been overwhelmingly passing these local bonds. I don't think that's going to change any time in the future. And the success rate of these bonds being passed has always been very high. So I just don't think that's going to change. We're seeing that same mentality and activity literally across the country. But I wouldn't say there's any particular strong point. It's been pretty balanced and present in all the geographies that we operate in.

Speaker Change: And so they've been overwhelmingly passing these local bonds. I don't think that's going to change any time in the future.

Speaker Change: And the success rate of these bonds passing has always been very high, so I just don't think that's going to change.

Speaker Change: We're seeing, you know, that same mentality and activity literally across the country. I wouldn't say there's any particular strong point. It's been pretty balanced and present in all the geographies we operate in.

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

Speaker Change: Are you seeing any difference between public and private activity as far as demand and projects that are in the works?

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

Speaker Change: I wouldn't say there's any significant difference there. We have activity in both of those segments, both public and private.

Speaker Change: And, you know, it just depends on where in the U.S. that the project could be and for what size. We've got some very large sales projects in the private sector that, you know, we're working right now and, you know, we'll continue to do that.

Marc Frye Riddick: Okay, great. And then I guess the last one from those wondering if there are any particular areas where you're getting any pushback, but it didn't seem as though there were any, but maybe it's sort of just put a fine point on whether or not you're seeing any pushback in any particular pricing dynamics in any parts of the business that we should be aware of. It didn't seem like enough numbers, but I was just like, yeah.

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

Joseph F. Hanna: Yeah, what I would say Marc is pricing in the last couple of years has gone up largely to account for higher costs. Cost of new units has gone up, and cost of maintaining the existing fleet has gone up. I think there's been some moderation in those inflationary pressures, so now what you're seeing is a normal cycle of the fleet where new contract pricing is generally higher than legacy contract pricing, and there is some upward inflationary pressure, but not as acute as it was two or three years ago, and we were talking about that a lot when it was causing us much higher costs.

Speaker Change: It didn't seem like enough numbers, but I was just sort of curious.

Speaker Change: Yeah, what I would say, Marc, is pricing in the last couple of years has gone up largely to account for higher costs.

Speaker Change: [inaudible]

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

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

Speaker Change: So, the environment, I think, overall is a little better from a cost point of view, and I think pricing has been stable with some positive effects as the fleet turns. And of course, as we mentioned earlier, our initiatives in areas like Mobile Modular Plus

Speaker Change: which are all trying to capture more revenue per unit as we service the customer.

Marc Frye Riddick: That's it for me. I appreciate it. Thank you.

Speaker Change: Okay.

Speaker Change: Great.

Speaker Change: That's it for me. I appreciate it. Thank you. Thanks Marc.

Operator: And ladies and gentlemen, that appears to be the last question. Let me now turn the call back over to Mr. Hanna for any closing remarks.

Speaker Change: Thank you.

Speaker Change: And ladies and gentlemen, that appears to be the last question. Let me now turn the call back over to Mr. Hanna for any closing remarks.

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

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

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

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

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Operator: ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? © BF-WATCH TV 2021

Speaker Change: [inaudible]

Marc Riddick: Andrew Wittmann, Andrew Wittmann, Manav Patnaik, John