Q3 2025 McGrath RentCorp Earnings Call

Thank you for standing by welcome to the Mcgrath rent Corp, third quarter 2025 earnings call.

At this time all conference participants are in a listen only mode.

<unk>, 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.

This conference call is being recorded today Thursday October 23 2025.

Before we begin note the matters of the company management will be discussing today that are not statements of historical fact are forward looking statements within the meaning of the private Securities Litigation Reform Act of 1095, including statements relating to the company's expectations strategies prospects back.

Doug or targets these.

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 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. The earnings release on form 8-K, and its Form 10-Q for the quarter ended September 32025.

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 go ahead Sir.

Thank you Dave Good afternoon, everyone. We appreciate your attendance on the graph ranked Corp third quarter earnings call for 2025.

Pleasure to be here today, and we're eager to share further insight into our performance.

I'll begin with an overview of our third quarter results before key shares the financial details and then we will open up the call for questions.

For the third quarter total company rental operations revenues rose by 4% with growth from all three of our rental businesses.

Project activity remains steady despite ongoing market uncertainties.

Mobile modular rental revenues increased by 2%.

The rental revenue growth, we experienced in the quarter was primarily due to commercial activity centered around larger infrastructure projects across all our geographies.

Smaller projects had been less prevalent which is consistent with the trend we have experienced year to date.

We had a busy education season with a good level of new shipment activity.

Funding for the education business remains solid.

Need for classroom modernization and growth in select areas remains consistent.

With higher shipment volumes for the quarter, we faced higher inventory center cost to prepare equipment for delivery.

Used offering inventory rather than investing in new product continuing to manage the fleet with a sharp focus on deploying capital efficiently.

Despite challenges in the demand environment, our book to orders increased during the third quarter. This was encouraging and positive for our momentum entering the fourth quarter.

Our ongoing efforts with mobile modular plus insight related services continued to go well.

Both experienced healthy growth during the quarter, we continue to be pleased with our year to date progress.

At portable storage rental revenues increased by 1% year over year and by 2% sequentially from the prior quarter.

Shipments grew and pricing remained stable opportunities in energy data centers and seasonal retail offset the flat construction market.

Overall, we are encouraged by these positive signs that suggest the market may be stabilizing after a challenging demand contraction in 2024.

Here is where in telcos rental revenue grew by a strong 9%.

With our general purpose and communications rental revenue saw strong growth maintaining positive momentum from the first half of the year.

Utilization at a healthy 65% improved year over year and remained steady sequentially versus the second quarter.

Rental demand pipelines remain solid as we entered the fourth quarter, indicating that the business is well positioned to continue its growth trajectory.

Turning my comments to the whole company, we do not believe Mcgrath is currently facing any immediate headwinds due to the ongoing federal government shutdown and any potential impacts from a long shutdown are unclear at this time.

With regard to the dynamic tariff environment. The impact of tariffs has been managed appropriately by our teams and has had minimal impact on our results.

Looking ahead to the rest of the year uncertain market conditions persist nonresidential construction indicators, such as the architectural billing index or Abi remained soft.

We remain focused on our strategic growth priorities dedicated to expanding our modular and portable storage businesses.

Over the course of this year, we have taken steps to enter new regions grow our mobile modular plus and site related services initiatives.

And increase our coverage through tuck in acquisitions.

All of these items support our efforts to become a true national modular solutions provider capable of serving our customers with storage units single-wide units large multi floor and multi storey facilities and services to meet all of their space needs.

I want to thank all our team members for your third quarter accomplishments and steadfast commitment to delivering the highest quality service to our customers.

Our culture at Mcgrath is a driving force behind our growth as we introduce more customers to the exceptional experience we offer.

I am pleased with our progress so far in 2025, and we remain dedicated to providing value to our customers and shareholders. As we finished the year.

With that I will turn the call over to Keith who will take you through the financial details of our quarter and our updated outlook for the full year.

Thank you Joe and good afternoon, everyone.

Looking at the overall corporate results for the third quarter total revenues decreased 4% to $256 million.

Joe Hanna: Exceptional experience we offer. I am pleased with our progress so far in 2024, and we remain dedicated to providing value to our customers and shareholders as we finish the year. With that, I will turn the call over to Keith, who will take you through the financial details of our quarter and our updated outlook for the full year.

With rental operations, increasing 4%.

Exceptional experience, we offer.

<unk> sales revenues decreasing 18% during the quarter.

Adjusted EBITDA decreased 7%.

$96 5 million.

I am pleased with our progress so far in 2025, and we remain dedicated to providing value to our customers and shareholders as we finish the year.

Excluding prior year items related to the terminated both Scott merger process net income for the third quarter decreased $3 6 million or 8% to $42 3 million and diluted earnings per share decreased 15.

With that, I will turn the call over to Keith who will take you through the financial details of our quarter and our updated outlook for the full year.

Keith Pratt: Thank you, Joe, and good afternoon, everyone. Looking at the overall corporate results for the third quarter, total revenues decreased 4% to $256 million, with rental operations increasing 4% and sales revenues decreasing 18% during the quarter. Adjusted EBITDA decreased 7% to $96.5 million. Excluding prior year items related to the terminated BlueScot merger process, net income for the third quarter decreased $3.6 million, or 8%, to $42.3 million, and diluted earnings per share decreased $0.15 to $1.72. Reviewing Mobile Modular's operating performance as compared to the third quarter of 2024, Mobile Modular total revenues decreased 5% to $181.5 million. The business saw 2% higher rental revenues and 5% higher rental-related services revenues, which were offset by 21% lower sales revenues. The sales revenues decrease was primarily due to lower new equipment sales.

Thank you, Joe, and good afternoon, everyone.

Can be $8 72.

Looking at the overall corporate results for the third quarter, total revenues decreased 4% to $256 million.

We're viewing mobile modular is operating performance as compared to the third quarter of 2024.

Mobile modular total revenues decreased 5% to 181 5 million.

With rental operations, increasing 4% and sales revenues. Decreasing 18% during the quarter.

Decreased 7% to 96.5 million.

The business saw a 2% higher rental revenues and 5% higher rental related services revenues, which were offset by 21% lower sales revenues.

The sales revenue decrease was primarily due to lower new equipment sales.

As we discussed in July.

2024 sales were more concentrated in the third quarter. This year, we expect a more balanced contribution from sales and related gross profit.

Including prior year items related to the terminated Bill Scott merger Process. Net income for the third quarter decreased 3.6 million or 8% to 42.3 million and diluted earnings per. Share decreased 15 cents to a dollar and 72 cents.

Reviewing mobile module is operating performance as compared to the third quarter of 2024.

Cross the third and fourth quarters.

This quarter had higher inventory center expenses to prepare available fleet for new shipment demand, which allowed us to minimize rental equipment capital spending.

We also operated with higher selling and administrative expenses to support our sales coverage.

As a result, adjusted EBITDA decreased 10% to $64 6 million.

Keith Pratt: As we discussed in July, while 2024 sales were more concentrated in the third quarter, this year we expect a more balanced contribution from sales and related gross profit across the third and fourth quarters. This quarter had higher inventory center expenses to prepare available fleet for new shipment demand, which allowed us to minimize rental equipment capital spending. We also operated with higher selling and administrative expenses to support broader sales coverage. As a result, adjusted EBITDA decreased 10% to $64.6 million. With softer demand conditions, we saw a lower average fleet utilization of 72.6% compared to 77.1% a year earlier. Despite the softer market demand, third quarter monthly revenue per unit on rent increased 6% year over year to $865. For new shipments over the last 12 months, the average monthly revenue per unit increased 3% to $1,192.

With softer demand conditions, we saw a lower average fleet utilization of 72, 6% compared to 77, 1% a year earlier.

Despite the softer market demand.

Third quarter monthly revenue per unit on rent increased 6% year over year to $865.

For new shipments over the last 12 months the average monthly revenue per unit increased 3% to 1000.

$192.

Joe highlighted we continued to make progress with our modular services offerings.

Modular plus revenues increased to $9 7 million from seven 9 million a year earlier.

And site related services increased to $15 6 million up from $12 7 million.

Overall mobile modular had a solid quarter as we continued to make progress with our modular business growth strategy. Despite some challenging demand conditions.

Despite the softer market demand in the third quarter, monthly revenue per unit on rent increased 6% year-over-year to $865.

Turning to the review of portable storage rental revenues for the quarter increased 1% to $17 3 million.

For new shipments over the last 12 months, the average monthly revenue per unit increased by 3% to $1,192.

Keith Pratt: As Joe highlighted, we continue to make progress with our modular services offerings. Mobile Modular Plus revenues increased to $9.7 million from $7.9 million a year earlier, and site-related services increased to $15.6 million, up from $12.7 million. Overall, Mobile Modular had a solid quarter as we continue to make progress with our modular business growth strategy, despite some challenging demand conditions. Turning to the review of portable storage, rental revenues for the quarter increased 1% to $17.3 million, which was the first year-over-year growth since the first quarter of last year. We have begun to feel encouraged that market conditions for portable storage are showing signs of stabilization despite soft commercial construction project activity. Average utilization for the quarter was 61.4% compared to 62.8% a year ago. Adjusted EBITDA was $9.2 million, a decrease of 14% compared to the prior year.

The first year over year growth since the first quarter of last year.

We have begun to feel encouraged that market conditions for portable storage are showing signs of stabilization. Despite soft commercial construction project activity.

If you'll highlight, we continue to make progress with our modular services offerings. Local modular plus revenues increased to $9.7 million from $7.9 million a year earlier, and psych-related services increased to $15.6 million, up from $12.7 million.

Average utilization for the quarter was 61, 4% compared to 62, 8% a year ago.

Adjusted EBITDA was $9 2 million, a decrease of 14% compared to the prior year.

Overall, mobile modular had a solid quarter and we continued to make progress with our modular business growth strategy. Despite some challenging demand conditions

Turning now to the review of Trs from Telco.

Turning to the review of portable storage rental revenues for the quarter increased 1% to 70.3 million.

<unk> had a strong quarter with total revenues up 6%.

This is the first year-over-year growth since the first quarter of last year.

$36 9 million driven by higher rental revenues.

Total revenues increased 9%.

The industry continued to experience improved demand across markets.

We have begun to feel encouraged that market conditions. For portable storage are showing signs of stabilization, despite soft commercial construction project activity,

Average utilization for the quarter was 64, 8% up from 57, 3% a year ago.

Average utilization for the quarter was 61.4% compared to 62.8% a year ago.

Rental margins improved 43% from 37% a year ago.

Adjusted, Evita was $9.2 million, an increase of 14% compared to the prior year.

Adjusted EBITDA was $20 2 million, an increase of 7% compared to last year.

Keith Pratt: Turning now to the review of TRS-RenTelco, TRS had a strong quarter with total revenues up 6% to $36.9 million, driven by higher rental revenues. Rental revenues increased 9% as the industry continued to experience improved demand across markets. Average utilization for the quarter was 64.8%, up from 57.3% a year ago. Rental margins improved to 43% from 37% a year ago. Adjusted EBITDA was $20.2 million, an increase of 7% compared to last year. The remainder of my comments will be on a total company basis. Third quarter selling and administrative expenses increased $3.2 million to $52.5 million as we operated with broader sales coverage to support long-term business growth and invested in information technology projects. Interest expense was $8.2 million, a decrease of $4.5 million as a result of lower average interest rates and lower average debt levels during the quarter.

Starting now to the review of TRS Rentelco.

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

Third quarter, selling and administrative expenses increased $3 2 million.

Here us at a strong quarter with total revenues up 6%, 236.9 million written by higher rental revenues.

$52 5 million as we operated with broader sales coverage to support long term business growth.

Improve demand across markets.

And investing in information technology projects.

Average utilization for the quarter was 64.8%, up from 57.3% a year ago.

Interest expense was $8 2 million a decrease of $4 5 million.

During the margins improved 43% from 37% a year ago.

As a result of lower average interest rates and lower average debt levels during the quarter.

The third quarter provision for income taxes based on an effective tax rate of 27, 7%.

Adjusted earnings were $20.2 million, an increase of 7% compared to last year.

The remainder of my comments will be in a total company-based format.

Compared to 2006, 4%.

Earlier.

Yes.

Turning to our year to date cash flow highlights net cash provided by operating activities was $175 million.

Third quarter selling and administrative expenses increased 3.2 million to 52.5 million as we operated with broader sales coverage to support long-term business growth.

Rental equipment purchases were $92 million done for $167 million last year.

And invested in information technology projects.

Interest expense was $8.2 million, and there was a decrease of $4.5 million.

Consistent with lower fleet utilization under our plan is to use the available fleet to satisfy customer orders.

As a result of lower average, interest rates and lower average debt levels during the quarter.

Keith Pratt: The third quarter provision for income taxes was based on an effective tax rate of 27.7% compared to 26.4% a year earlier. Turning to our year-to-date cash flow highlights, net cash provided by operating activities was $175 million. Rental equipment purchases were $92 million, down from $167 million last year, consistent with lower fleet utilization and our plans to use available fleet to satisfy customer orders. At quarter end, we had net borrowings of $552 million, and the ratio of funded debt to the last 12 months' actual adjusted EBITDA was 1.58 to 1. Wrapping up the financial review, while there is still uncertainty in the demand environment, we are pleased with our year-to-date results, and we have seen some encouraging positive trends as we enter the fourth quarter.

At quarter end, we had net borrowings of $562 million and the ratio of funded debt to the last 12 months actual adjusted EBITDA was $1 five eight to one.

The third quarter provision for income taxes was based on an effective tax rate of 27.7%.

Approach of 26.4 percent a year earlier.

Wrapping up the financial review, while there is still uncertainty in the demand environment. We are pleased with our year to date results and we have seen some encouraging positive trends as we enter the fourth quarter.

Turning to our year-to-date cash flow highlights, net cash provided by operating activities was $175 million.

As a result, we have upwardly revised our full year financial outlook and we currently expect.

Rental equipment purchases were 92 million Don for 167 Million last year.

Total revenue between $935 $955 million.

Consistent with lower fleet utilization and our plan to use available fleet to satisfy customer orders.

And EBITDA between $350 and $357 million.

And Bruce rental equipment capital expenditures between 120 and $125 million.

At quarter end, with net borrowings of $552 million and the ratio of funded debt to the last 12 months actual adjusted EBITDA at 1.58 to 1.

We are proud of Mcgrath <unk> third quarter performance and we are fully focused on solid execution for the remainder of the year.

That concludes our prepared remarks.

Keith Pratt: As a result, we've upwardly revised our full-year financial outlook, and we currently expect total revenue between $935 and $955 million, adjusted EBITDA between $350 and $357 million, and gross rental equipment capital expenditures between $120 and $125 million. We are proud of McGrath's third-quarter performance, and we are fully focused on solid execution for the remainder of the year. That concludes our prepared remarks. Dave, you may now open the lines for questions.

Wrapping up the financial review, while there is still uncertainty in the demand environment, we are pleased with our year-to-date results. We have seen some encouraging positive trends as we enter the fourth quarter.

You May now open the lines for questions.

At this time, if you'd like to ask a question. Please press the star key followed by the one key on your telephone you may or move yourself from the question queue at any time by pressing star and two again it is star and wanted to ask a question today.

As a result, we've upwardly revised our full-year financial outlook, and we currently expect

total revenue between 935 and 955 million.

Adjusted IBA between $350 million and $357 million.

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

And the first rental equipment capital expenditures were between $120.

And 125 million.

Thanks, very much and good afternoon.

I guess guys could you address kind of.

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

You foreshadowed it last quarter, but the lumpiness of the sales activity could you speak a little bit about what our run rate in the business is.

That concludes our prepared remarks.

Dave, you may not open the lines for questions.

Operator: At this time, if you'd like to ask a question, please press the star key followed by the one key on your telephone. You may remove yourself from the question queue at any time by pressing star and two. Again, it is star and one to ask a question today. We'll take our first question from Scott Schneeberger with Oppenheimer. Please go ahead, your line is open.

Yes TBD.

Yes about lining that it was big in the third quarter last year, it's more smooth across the year this year, but it looks like it will over the course of 'twenty five grow over 24.

At this time, if you'd like to ask a question, please press the star key followed by the 1 keys and 1 to ask a question today.

That right and how should we think about it going forward.

Yes outside of the Lumpiness on an annual basis.

We'll take our first question from Scott Schneberger with Oppenheimer. Please go ahead. Your line is open.

Scott Schneeberger: Thanks very much, and good afternoon. Could you address, you foreshadowed it last quarter, but the lumpiness of the sales activity? Could you speak a little bit about what the run rate in the business is? Keith, you did a good job outlining that it was big in the third quarter last year. It's more smooth across the year this year, but it looks like it will, over the course of 2025, grow over 2024. Is that right, and how should we think about it going forward, outside of the lumpiness on an annual basis?

Yes, Scott I can answer that.

Youre right, we did have a big sales quarter in Q3 of last year, and we did telegraph it it would be more balanced this year. So things are turning out the way that we thought they would.

Our sales backlog is strong.

We had a number of projects in this particular quarter that didn't close by the end of the quarter that will move into the fourth quarter, we did not lose our none of those projects were canceled.

So overall, we're very positive on our sales outlook for the year and as you can see from our guidance adjustment. We think that the business is going to perform well in sales is a big part of that so we're confident that we'll be able to hit those numbers.

Uh, thanks very much and good afternoon. Um, I guess, guys, could you address kind of a, you foreshadowed it last quarter, but the lumpiness of the sales activity? Could you speak a little bit about what the run rate in the business is? Um, it's, you know, TV did a good job outlining that it was big in the third quarter of last year. It's more smooth across the year this year, but it looks like it will, over the course of 2025, grow over 2024. How is that?

Is that right? And how should we think about it going forward, you know, outside of the lumpiness on an annual basis?

Joe Hanna: Yeah, Scott, I can answer that. You're right. We did have a big sales quarter in Q3 of last year, and we did telegraph that it would be more balanced this year. Things are turning out the way that we thought they would. Our sales backlog is strong. We had a number of projects in this particular quarter that didn't close by the end of the quarter that will move into the fourth quarter. We did not lose, or none of those projects were canceled. Overall, we're very positive on our sales outlook for the year, and as you can see from our guidance adjustment, we think that the business is going to perform well, and sales is a big part of that. We're confident that we'll be able to hit those numbers.

Thanks.

Is this a business on an upward trajectory would you say I'm not asking for 2006 guidance, but.

This year I believe it's going to be probably better than last year.

Should we continue to anticipate that kind of trend or is it safe for us to think about it as a flattish business and take it as it comes.

No.

We anticipate that thats going to continue to grow.

It's a.

It's an important part of the market, we are well positioned with resources out in the field to to take advantage of these projects. They keep in mind that when we go to a customer. They they may have a rental need in one year that very well could turn into a sales need and are following.

Yeah, Scott, I can answer that. Um, you're right. We did have a big sales quarter in Q3 of last year and we did Telegraph that. It would be more balanced this year. So if things are turning out the way that we thought they would, um, our sales backlog is is strong. Um, we had a number of projects in this particular quarter that um didn't close by the end of the quarter, that will move into the fourth quarter. We did not lose or none of those projects were canceled. So overall, we're very positive on our sales outlook for the year and as you can see from, you know, our guidance adjustment, we think that the the business is going to perform well and sales is a big part of that. So we're confident that we'll be able to hit those numbers.

Scott Schneeberger: Thanks. Is this a business on an upward trajectory, would you say? I'm not asking for 2026 guidance, but this year, I believe, is going to be probably better than last year. Should we continue to anticipate that kind of trend, or is it safer just to think about it as a flat-ish business and take it as it comes?

And so we want to be positioned to be able to take advantage of.

That customer need no matter, what they what they need and so our folks are out there looking for those opportunities and we feel it's an important part of the business and it's going to grow.

Joe Hanna: No, we anticipate that that's going to continue to grow. It's an important part of the market. We're well-positioned with resources out in the field to take advantage of these projects. Keep in mind that when we go to a customer, they may have a rental need in one year that very well could turn into a sales need in a following year. We want to be positioned to be able to take advantage of that customer need no matter what they need. Our folks are out there looking for those opportunities, and we feel it's an important part of the business, and it's going to grow.

Business on an upward trajectory, would you say? I'm not asking for guidance, but this year I believe is going to be probably better than last year. So, we continue to anticipate that kind of trend, or is it safe for us to think about it as a flat business and take it as it comes?

No, uh, we anticipate that that's going to continue to grow.

Sounds good.

The.

Keeping it on on modular.

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Can we think.

If I heard you loud and clear.

Echoes what another larger rental companies said earlier today that they are really as strong demand at the.

Our brand in the market.

For larger projects could you speak to the education.

The sector and how its funding there how do you see that as we're looking out to next year.

Sure we had.

Recent Q3 in education, we shipped more than we did last year.

It's a it's a uh, it's an important part of the market. We're well positioned with resources out in the field to uh to take advantage of these uh projects to keep in mind that when we go to a customer, they they may have a rental need at in 1 year that very well, could turn into a sales need in a following year. And so we want to be positioned to be able to take advantage of um, you know, that customer need no matter what they, what they need. And so our folks are out there looking for those opportunities and and we feel it's an important part of the business and it's going to grow.

Scott Schneeberger: Sounds good, Joe. Keeping it on modular, can we speak to the, I've heard you loud and clear, and it kind of echoes what another larger rental company said earlier today, that there really is strong demand at the upper end of the market for larger projects. Could you speak to the education sector and how is funding there? How do you see that as we're looking out to the next year?

And we also got a number of returns this particular year that.

Sounds good, Joe. Um, the, uh, keeping it on, um, on module the.

As part of the normal cadence, but.

Muted our results there are a little bit now having said that.

The thing that makes me sleep well at night and.

I've been doing this for a long time, what we realize is.

That each year with education is always a little bit different sometimes districts place orders earlier in the year, sometimes they place orders later in the year. If there is some kind of economic uncertainty, which there was with the administration and the department of education and all the things that were going on there. It just makes districts.

Joe Hanna: Sure. We had a decent Q3 in education. We shipped more than we did last year, and we also got a number of returns this particular year that is part of the normal cadence, but muted our results there a little bit. Having said that, the thing that makes me sleep well at night, and you know, I've been doing this for a long time, what we realize is that each year with education is always a little bit different. Sometimes districts place orders earlier in the year. Sometimes they place orders later in the year. If there's some kind of economic uncertainty, which there was with the administration and the Department of Education and all the things that were going on there, it just makes districts a little bit nervous. Are we going to have the money for the programs? Programs equals teachers equals classrooms.

Can we speak to the? I've heard you loud and clear. Um and then kind of Echoes what another larger rental company said earlier today, that there really is strong demand at the at the um upper end of the market um for larger projects. Could you speak to the education? Um uh sector and and and how funding there, how do you see that as we're looking out to the next year.

Little bit nervous or are we going to have the money for the programs programs equals teachers equals classrooms, and so in this particular year orders were placed a little bit later in the season, but we are getting orders all the way into Q4 here and we're getting orders for next year, but what really is.

Sure. Um we had a a a defense uh, Q3 and in education. We we uh, shipped more than we did last year. Um, and we also got a number of returns, uh, this particular year that um, you know, is part of the normal Cadence. But um, uh, you know, muted our results there a little bit.

Now, having said that the thing that makes me sleep well at night and and, you know, I've been doing this for a long time. What we realized is

Think.

Makes me sleep well at night is the fact that the funding is very very good California passed the $10 billion dollar facilities Bond, Texas passed another $8 billion in facilities bond. It was later in the year. So we won't see that until 2026 and then there is literally billions of dollars that have been passed.

At a local level that are waiting to be dispersed in used on projects. So I feel very very good about that.

Joe Hanna: This particular year, orders were placed a little bit later in the season, but we're getting orders all the way into Q4 here, and we're getting orders for next year. What really is, I think, makes me sleep well at night is the fact that the funding is very, very good. California passed a $10 billion facilities bond. Texas passed another $8 billion in facilities bond. It was later in the year, so we won't see that until 2026. There are literally billions of dollars that have been passed at a local level that are waiting to be dispersed and used on projects. I feel very, very good about the status and the solid nature of our education business and think that it's going to be a tailwind for us in quarters to come.

The status and the solid nature of our education business and think that it's going to be a tailwind for us in.

that each year with education is, is always a little bit different sometimes districts Place orders earlier in the year, sometimes they Place orders later in the year. If there's some kind of economic uncertainty, which there was with the administration and the Department of Education and all the things that were going on there, it just makes districts a little bit nervous. Are we going to have the money for the programs programs equals teachers equals classrooms? And so when you know this particular year orders were placed a little bit later in the season but we're getting

In quarters to come.

Good Joe Thanks for that clarity.

Across both modular and portable storage, obviously, the lower end of the market remains challenged no big surprise, there could you speak to the rate environment that spot rate environment across both please.

Sure I.

I would say for both businesses our rates are holding in there pretty well.

You can see that we have this.

We're still working on this differs.

<unk> differential between our fleet average pricing and what units are going out on new contracts now and so we do continue to have that tailwind and that's been that's been a positive and we will continue to be a positive for a while as the fleet churns.

Orders all the way into Q4 here and we're getting orders for next year. But what really is um I think um, makes me sleep well at night is the fact that the funding is very very good, California passed a 10 billion dollar facility fund, Texas passed another 8 billion dollars in in facilities Bond. It was later in the year so we won't see it out until 2026 and then there's literally billions of dollars that have been passed at a local level that are waiting to be dispersed and used on projects. So I feel very, very good about the, the status, and the solid nature of our education business and think that it's going to be a Tailwind for us in in, uh, in quarters to come.

Scott Schneeberger: Sounds good, Joe. Thanks for that clarity. Across both modular and portable storage, obviously, the lower end of the market remains challenged. No big surprise there. Could you speak to the rate environment, the spot rate environment across both, please?

Over in portable storage rates are steady and we've been really working hard to not have to lower our unit.

Rents, we have had to give up a little bit on some of the transportation costs to stay competitive, but wed rather do that than give up on the rental rate and so.

Joe Hanna: Sure. I would say for both businesses, our rates are holding in there pretty well. You can see that we have this, you know, we're still working on this differential between our fleet average pricing and what units are going out on new contracts now. We do continue to have that tailwind, and that's been a positive, and will continue to be a positive for a while as the fleet churns. Over in portable storage, rates are steady, and we've been really working hard to not have to lower our unit rents. We have had to give up a little bit on some of the transportation costs to stay competitive, but we'd rather do that than give up on the rental rate. Contrary to what's happened in the industry in years past, this is a good sign, and I think we're on pretty solid ground.

Good, Joe. Thanks for that clarity across both modular and portable storage. Obviously, the lower end of the market remains challenged—no big surprise there. Could you speak to the rate environment, specifically the spot rate environment across both, please?

Contrary to whats happened in the industry in years past. This is a good sign and I think we're in pretty solid ground.

Thanks, So one more on storage and then just a couple of others and I'll pass it on.

Sure. Um, I would say for both businesses, uh, our rates are holding in there pretty well. Um, and you can see that we have this um uh, you know, we're still working on this. Um, differential between our Fleet average pricing and what units are going out on new contracts now. And so we do continue to have that tailwind and that

I found it interesting you mentioned I think it was energy data centers and then seasonal retail in stores, that's not an area where you typically competed but we've heard recently from a competitor of yours that.

That's been that's been a positive and we'll continue to be a positive for a while as the fleet churns.

Maybe some of the large players in the industry are changing their strategy with how they how they bid business.

Is this an area that youre going to move it as a one time frame are you moving to this space more so if you can just elaborate on specifically the seasonal retail.

Um, over in portable storage, uh, rates are steady, and we've been really working hard to not have to lower our unit. Uh, rents. We have had to give up a little bit on, uh, some of the transportation costs to stay competitive, but we'd rather do that than give up on the rental rate. And so, um, you know, I I contrary to what's happening in the industry in years past, this is a good sign. And, and uh, I think we're in pretty solid ground.

Scott Schneeberger: Thanks, Joe. One more in storage, and then just a couple others, and I'll pass it on. I found it interesting you mentioned, I think it was energy data centers and then seasonal retail in storage. That's not an area where you've typically competed, but we've heard recently from a competitor of yours that maybe some of the large players in the industry are changing their strategies with how they bid business. Is this an area that you're going to move? Is this a one-time thing? Are you moving to this space more so? If you could just elaborate on, specifically the seasonal retail.

Sure.

This is this is not a big part of our portable storage business I don't anticipate that it's going to be a big part of our business, but we're happy to.

Pick up orders and we were well positioned with.

Some of the large retailers to get orders if they are available and we have people out there that that look for them.

But it's not.

It's not a strategic initiative in the business for us to really try to grow that because just for the reason it is seasonal those units go out they come back.

We'd much rather have a much longer term with other types of customers, but any seasonal business. We can pick up we're happy to do it and we did some this year.

Joe Hanna: Sure. This is not a big part of our portable storage business. I don't anticipate that it's going to be a big part of our business, but we're happy to pick up orders, and we were well-positioned with some of the large retailers to get orders if they're available, and we have people out there that look for them. It's not a strategic initiative in the business for us to really try to grow that because just for the reason it is seasonal. Those units go out. They come back. We'd much rather have a much longer term with other types of customers. Any seasonal business we can pick up, we're happy to do it, and we did some this year.

And, uh, I think it was energy data centers and then seasonal retail in storage. That's not an area where you've typically competed, but we've heard recently from a competitor of yours that maybe some of the large players in the industry are changing their strategies with how they bid business. Um, is this an area that you're going to move into? Is this a one-time thing? Are you moving to this space more? So, if you could just elaborate on, uh, specifically the seasonal retail.

Okay. Thanks, and then over in Crs.

How does your visibility in the next year 2025 has been a pretty good year for you in that business.

How do you feel about heading into next year, maybe there was some discussion across the end markets.

Yes, a little bit it's tough to predict into next year. We're in we're in the process of putting our plan together for next year. So I can't comment too much on that but the encouraging thing is that our.

Our bookings have been strong.

Our.

Our rental order volume has been strong we manage the inventory appropriately and I think even coming into Q4 here.

Sure. This this is this is not a big part of our portable storage business. I don't anticipate that it's going to be a big part of our business, but we're happy to, uh, you know, pick up orders and we were well positioned with uh some of the large retailers to to to get orders. If they're, you know, available and we have people out there that that look for them. Uh, but it's, it's not, you know, it's not a strategic initiative in the business for us to, really try to grow that. Because just for the reason, it is seasonal, those units go out, they come back, um, we'd much rather have a much longer term with other types of customers. But any seasonal business, we can pick up. We're happy to do it and we did some this year.

Scott Schneeberger: Okay. Thanks. Over in TRS-RenTelco, how does your visibility in the next year look? 2025 has been a pretty good year for you in that business. How do you feel about heading into next year, maybe with some discussion across the end markets? Thanks.

Things that things are looking good for the month of October and I think that's momentum that will carry us into next year, we're not seeing anything different in the landscape that we.

What we're seeing right now that's going to indicate a big change for next year, but I think we've got momentum to keep in mind too that this was a much shorter term rental business. So it is harder to see out over the hood.

Joe Hanna: Yeah, a little bit. It's tough to predict into next year. We're in the process of putting our plan together for next year, so I can't comment too much on that. The encouraging thing is that our bookings have been strong, our rental order volume has been strong, we manage the inventory appropriately, and I think even coming into Q4 here, things are looking good for the month of October. I think that's momentum that will carry us into next year. We're not seeing anything different in the landscape that we're seeing right now that's going to indicate a big change for next year, but I think we've got momentum. Keep in mind, too, that this is a much shorter-term rental business, so it is harder to see out over the hood in terms of what is coming down the pike.

Okay, thanks and then over in trf. Um, how does your visibility in the next year? Uh, 2025 has been a pretty good year for you in that business. Um, how how do you feel about having in the next year? Maybe with some, um, discussion across the end markets? Thanks.

In terms of what is coming down the pike, but so far we're encouraged and we'll know more and be able to share more of that in the Q4 call.

Great. Thanks, and last for me you called out.

Technology spend or investment in projects and technology.

Aberrate on what Youre doing and is that two two sizable.

Sizable magnitude.

And what type of returns youre thinking on that.

Thanks.

Sure the bright spot Im assuming youre still talking about Trs the bright spot in that business. This year.

As along the.

Is along the wired communications part of the business and the business that we're getting of data centers. That's been a real strong point for us in that very technology oriented we are well positioned to serve that market. There's a ton of testing that needs to be done when you put in a data center and we're on it.

Joe Hanna: So far, we're encouraged, and we'll know more and be able to share more in the Q4 call.

Scott Schneeberger: Great. Thanks. Last from me, you called out technology spend or investments in projects in technology. Could you elaborate on what you're doing, and is that to a sizable magnitude, and what type of returns you're seeking in that investment? Thanks.

Yeah, a little bit. It's tough to predict into next year. We're in we're in the process of putting our plan together for next year or so, I can't comment too much on that. But the encouraging thing is that, you know, our our bookings have been strong. Um, our um, uh, our rental order volume has been strong. We manage the inventory appropriately, and I think even coming into Q4 here. Uh, things things are looking good for the month of October, and I think that's momentum that will carry Us in the next year. We're not seeing anything different in the landscape that we, you know, that we're seeing right now. Uh, that's going to indicate a big change for next year, but I think we've got momentum but keep in mind too that this was a much shorter term rental business. So it is harder to see out over the Hood. Um in terms of what you know it's coming down the pipe but so far we're encouraged and we'll know more and be able to share more in the in the Q4 call.

Hey, thanks. And last from me, you called out, um,

And that's been a that's been good for us this year and I think it's going to continue.

Love It that's actually not what I was asking Joe, but that's about all I am sorry fighting for it okay.

Joe Hanna: Sure. The bright spot, I'm assuming you're still talking about TRS-RenTelco. The bright spot in that business this year is along the wired communications part of the business and the business that we're getting at data centers. That's been a real strong point for us, and that's very technology-oriented. We're well-positioned to serve that market. There's a ton of testing that needs to be done when you put in a data center, and we're on it. That's been good for us this year, and I think it's going to continue.

Technology spend or investments in projects and Technology could you elaborate on what you're doing and um is that to uh to a a sizable magnitude um and and what type of returns you're you're seeking in that uh investment thanks.

Why did I Miss there what.

What are you what are you glad you I'm glad you added that in there because that was well worth hearing, but I was just asking in general for the total for the total Corporation.

Sure. Um, the bright spot I'm I'm assuming you're still talking about TRS the bright spot in that business this year um, is is along the um,

Sounded like you've been making some technology investments and Mcgrath itself.

Oh, sorry.

Yes, what I was asking but I think your last answer, but if we can touch on that as relatively flat.

Sorry about that Scott I completely missed that I should have asked for clarification, yet because the technology investments that we're making are normal course.

Is along the the wired Communications part of the business and the and the business that we're getting at data centers, that's been a real strong point for us. And that's very technology-oriented. Uh, we're well positioned to serve that market. There's a ton of testing that needs to be done when you put in a Data Center and we're we're on it. Um, and that's been a that's been good for us this year and I think it's going to continue.

Scott Schneeberger: Love it. That's actually not what I was asking, Joe, but that's a better answer than what I was pitching for.

Always need to update our systems systems come out of.

Joe Hanna: No, what did I miss?

Support and in years.

Scott Schneeberger: That was good.

Joe Hanna: What do you mean?

Scott Schneeberger: I'm glad you added that in there because that was well worth hearing. I was just asking general for the total, for the total corporation. It sounded like you've been making some technology investments in McGrath itself.

Need to move things to the cloud there's just all kinds of work that we need to do to to keep our systems relevant and keep them customer friendly and customer facing so.

That's pretty much what I meant by the technology enhancements.

Joe Hanna: Oh, I'm sorry.

Scott Schneeberger: That's what I was asking, but I liked your last answer. If we could touch on that as well, too, please. Thanks.

Got it thanks, and what I was hearing about that work youre doing a data centers with Drs.

Joe Hanna: Sorry about that, Scott. I completely missed that. I should have asked for clarification. The technology investments that we're making are normal course. You know, we always need to update our systems. Systems come out of support in years. We need to move things to the cloud. There's just all kinds of work that we need to do to keep our systems relevant and keep them customer-friendly and customer-facing. That's pretty much what I meant by the technology enhancements.

I'll turn it over thanks, so much.

Love it. That's actually not what I was asking though, but that's the best. That's what I was fishing for. Well what did I miss? What do you what do you? I'm glad you. I'm glad you added that in there because that that was well worth hearing, but I was just asking general for the total of for the total Corporation. It it sounded like you've been making some technology investments in Magrath itself. Um, oh, I'm sorry. I so that's what I was asking. But I'd like your last answer, but if we could touch on that as well too. Please, thanks,

We'll take our next question from Daniel Moore with CJS Securities. Please go ahead. Your line is open.

Thank you good afternoon, Joe and Keith Thanks for taking my questions.

You bet.

Start with the obvious.

You get all over but you mentioned some encouraging trends can you just speak to the cadence of inquiries as well as order rates over say the last 136 months start with mobile modular.

Scott Schneeberger: Got it. Thanks. I like what I was hearing about the work you're doing at data centers and TRS-RenTelco. All right, I'll turn it over. Thanks so much.

Sorry about that Scott I completely missed that I should have asked for clarification. Yes. The the technology Investments that we're making are normal course, you know we always need to update our systems systems come out of um, support in in years. Uh, we need to move things to the cloud. There's just all kinds of work that we need to do to, to, uh, keep our systems relevant and keep them, uh, customer friendly and customer facing. So, um, that's, that's pretty much what I meant by the technology enhancements.

Sequential improvement more stable how would you describe it and then the same question for portable storage.

Got it. Thanks and, uh, like what I was hearing about uh the the work you're doing at data, centers, and PRS. Um, all right. I'll turn it over. Thanks so much.

Operator: We'll take our next question from Daniel Moore with CJS Securities. Please go ahead. Your line is open.

Sure I'll start with mobile modular.

Our quote volumes have been healthy and our booked order levels have been healthy too and they were healthy for this particular quarter up double digits that was fairly consistent with the second quarter and up from the first quarter.

We'll take our next question from Daniel Moore with CJS Securities. Please go ahead; your line is open.

Daniel Moore: Thank you. Good afternoon, Joe and Keith. Thanks for taking the questions.

Joe Hanna: You bet.

Daniel Moore: I'll start with, obviously, you know, you get a little already, but you mentioned some encouraging trends. Can you just speak to the cadence of inquiries as well as order rates over, you know, say the last one, three, six months? Start with Mobile Modular. Sequential improvement, more stable? How would you describe it? Then the same question for portable storage.

Do that.

And I would say, we're seeing a similar trend in portable storage I wouldn't say that the third.

The third quarter, we're not seeing any marked increase over the second quarter, but we're seeing a consistent level of inquiries and and and built to order flow.

I'll start with, yeah, yeah. Obviously, you get it already, but you mentioned some encouraging trends. Can you just speak to the cadence of inquiries as well as order rates over, you know, say the last 1, 3, and 6 months? Start with mobile modular—sequential improvement, more stable. How would you describe it? And then the same question for portable storage.

Joe Hanna: Sure. I'll start with Mobile Modular. Our quote volumes have been healthy, and our booked order levels have been healthy too, and they were healthy for this particular quarter, up double digits. That was fairly consistent with the second quarter and up from the first quarter. I would say we're seeing a similar trend in portable storage. I wouldn't say that the third quarter, you know, the third quarter we're not seeing any marked increase over the second quarter, but we're seeing a consistent level of inquiries and booked order flow, sequentially.

<unk>.

Really helpful.

Something that you've described in detail in laid out again this quarter the shift from Capex to Opex.

The last few quarters as you referred this units rather than purchase new ones Dampens Your DAP margins, a little not necessarily your cash flow is there.

Uh, sure, off. Yeah, I'll start with Mobile Modular. Our quote volumes have been healthy, and our booked order levels have been healthy too. They were healthy for this particular quarter, up double digits, which was fairly consistent with the second quarter and up from the first quarter.

Something you can expect to continue into next year and what would cause you to shift back into a little bit more of a capex mode.

Yes, I can.

With that I think it all goes to fleet utilization. So if you look at the modular fleet. There are more markets, where we have equipment available to meet new orders. If you go back 18 months two years ago utilization was higher it was more common that when a new order came in we were already highly.

Um, and I would say we're seeing a similar Trend in portable storage. I wouldn't say that the third, you know, the third quarter, we're not seeing any marked increase over the second quarter, but we're seeing a consistent level of inquiries and and uh and built to order flow uh sequentially.

Daniel Moore: Really helpful. You know, something that you've described in detail and laid out again this quarter, the shift from CapEx to OpEx over the last few quarters as you refurbish units rather than purchase new ones dampens your DAP margins a little, not necessarily your cash flow. Is that something you can expect to continue into next year, and what would cause you to shift back into a little bit more of a CapEx mode?

And we would look to invest capital to meet the order. So thats the dynamic at play so I think to answer your question look at where utilization is when we're entering next year and for businesses, where it's low which is currently the case with portable storage and in many of our modular regions, we've got available equipment.

Really helpful. Um, you know, something that you've described in detail and laid out, again, this quarter is the shift from CapEx to OpEx. You know, over the last few quarters, as you refurbish units rather than purchase new ones, it dampens your DApp margins a little, not necessarily your cash flow. Is that something you can expect to continue into?

Keith Pratt: Yeah, Dan, I can help with that. I think it all goes to fleet utilization. If you look at the modular fleet, there are more markets where we have equipment available to meet new orders. If you go back 18 months, 2 years ago, utilization was higher. It was more common that when a new order came in, we were already highly utilized, and we would look to invest capital to meet the order. That's the dynamic at play. I think to answer your question, look at where utilization is when we're entering next year. For businesses where it's low, which is currently the case at portable storage and in many of our modular regions, we've got available equipment, and that's how we'll meet demand. There'll be a trade-off there.

Next year. And what would cause you to shift back into you know a little bit more of a capex mode.

So we will meet demand so there'll be a trade off there. It may need those expenses continue to be more elevated but from a cash flow point of view.

Yeah, I can help with that. I think it all goes to fleet utilization. So, if you look at the modular fleet, there are more markets where we have the...

Right thing to do so.

It's working I would say at Trs, where we've seen good recovery, particularly over the last three quarters and where utilization in the mid 16 is actually very good utilization for that business. That's an area. We're already we're looking at selectively spending the capital and adding to the fleet again.

To meet demand and we're very happy to do that.

Yes.

Really helpful.

Clearly, we still have a couple of months to go here and there.

Keith Pratt: It may mean those expenses continue to be more elevated, but from a cash flow point of view, it's the right thing to do. That's how it's looking. I would say at TRS-RenTelco, where we've seen good recovery, particularly over the last three quarters, and where utilization in the mid-60% is actually very good utilization for that business, that's an area where already we're looking at selectively spending the capital and adding to the fleet again to meet demand, and we're very happy to do that.

We won't be looking to guide for a couple of months after that.

Just wondering if you could maybe contrast, the environment today compared to where we were say this time last year.

And whether or not you expect.

Get back to more.

Normalized long term growth in EBITDA as we look out 'twenty six 'twenty seven thanks again for the color.

Available to meet new orders. If you go back, 18 months, 2 years ago. Utilization was higher. It was more common that when a new order came in, we were already highly utilized and we would look to invest Capital to meet the order. So that's the dynamic at play. So I think to answer your question, look at where utilization is when we're entering next year and for businesses where it's low, which is currently the case at portable storage. And in many of our modular regions, we've got available equipment and that's how we'll meet demand. So there'll be a trade-off there, it may mean those expenses continue to be more elevated but from a cash flow point of view, uh it's the right thing to do. So that that's how it's looking. I would say at TRS where we've seen good recovery particularly over the last 3 quarters and we're utilization in the mid 60s, is actually very good utilization for that business. That is an area where already we're looking at select.

Yes, Dan ill throw in a couple of comments I'm sure.

Joe can add to it.

I would characterize characterize the environment is still mixed.

We spending the capital and adding to the fleet again to meet demand, and we're very happy to do that.

Daniel Moore: Really helpful. Clearly, we still have a couple of months to go here, and it won't be looking to guide for a couple of months after that. I just wonder if you could maybe contrast the environment today compared to where we were, say, this time last year, and whether or not you expect to get back to more of kind of a normalized long-term growth in EBITDA as we look out, you know, 2026, 2027. Thanks again for the color.

Talked already about things like the architectural billings index, which is really bounced along below 50 for all this year and some months a little better some months a little worse, but consistently below 50.

The headwind was for parts of the business smaller projects and portable storage are definitely suffered as well due to interest grid.

Really helpful. Um, you know, clearly we still have a couple months to go here and, and, and it won't be looking to guide, you know, for a couple of months after that, I just wonder if you could, maybe contrast the environment today compared to where we were say this time. You know, last year um, and whether or not you expect

Hi, and really a slow journey of seeing interest rates start to come down and then at various points in the year.

To get back to a more kind of a normalized loan term growth in in ibida, we look out you know 26 27. Thanks again for the color.

Keith Pratt: Yeah, Dan, I'll throw in a couple of comments. I'm sure Joe can add to it. I characterize the environment as still mixed. We've talked already about things like the architectural billings index, which has really bounced along below 50 for all this year, and some months a little better, some months a little worse, but consistently below 50. That's a headwind for parts of the business. Smaller projects in portable storage have definitely suffered as well due to interest rates being high and really a slow journey of seeing interest rates start to come down. At various points in the year, a lot of this related just to policy and governmental topics, there's that air of uncertainty that probably means some customers have either moved with a little bit more deliberation, a little bit more caution, and we've seen examples of projects just take longer to get executed.

Lot of it is related just the policy and governmental topics does that air of uncertainty that probably mean some customers have either moved.

With a little bit more deliberation, a little bit more caution and we've seen examples of projects just take longer to get executed. So that's really the backdrop of how we'd manage through this year and it hasn't been an easy year for US. If you then look into next year. The question is how many.

Any of those headwinds start to ease do we see interest rates come down enough that people start to act more quickly on starting up new projects.

And do we see some of the broader macro indicators like Abi start to move into positive territory and indicate that people are planning to execute a larger number of projects going forward I think it's too early to tell.

Yeah, Dan, I I'll throw in a couple of comments, I'm sure. Uh, Joe can add to it. Um, I characterize characterize the environment as still mixed. Uh, we've talked already about things like the architectural, build buildings index, which has really bunched along below 50 for all this year and some months, a little better, some months, a little worse, but consistently below 50, um, that's a headwind for parts of the business. Um, smaller projects and portable storage have definitely suffered as well, due to interest rate, uh, being high and really a slow journey of seeing interest rates start to come down. And then at various points in the year, uh a lot of this related, just the policy and and governmental topics. There's that error of uncertainty that probably means some kind

As we said in our prepared remarks, we've done a pretty good job. This year of counter balancing some of those headwinds with all of our growth initiatives. The services side. Our modular is getting good revenue per rental unit, which we're continuing to get it grow and in some of the regional expansion, where we have the hiring and we're begin.

Keith Pratt: That's really the backdrop of how we've managed through this year. It hasn't been an easy year for us. If you then look into next year, the question is, how many of those headwinds start to ease? Do we see interest rates come down enough that people start to act more quickly on starting up new projects? Do we see some of the broader macro indicators like ABI start to move into positive territory and indicate that people are planning to execute a larger number of projects going forward? I think it's too early to tell.

To fund equipment purchases to support growth in some regions, but for us are relatively undeveloped and where we see longer term opportunity. So those are the things you've got to lay on the scales. As you look at the pluses and minuses, but will influence next year.

Keith Pratt: I think, as we said in our prepared remarks, we've done a pretty good job this year of counterbalancing some of those headwinds with all of our growth initiatives, the services side on modulars, getting good revenue per rental unit, which we're continuing to get and grow, and then some of the regional expansion where we have been hiring and we're beginning to fund equipment purchases to support growth in some regions that for us are relatively undeveloped and where we see longer-term opportunity. Those are the things you've got to lay on the scales as you look at the pluses and minuses that will influence next year.

So I'd like to just click on that just a minute to what he said about the.

Regional expansion I mean, we.

<unk> hired a number of folks this year and we're putting them into new markets and also markets that are adjacent to operating areas that we're already in and we definitely are anticipating that to be a nice contributor to next year's result, So we're really trying to add that horsepower.

Our in there to be able to continue to grow the business. Despite what the market is doing.

That's really helpful last one and I'll jump out.

Maybe just talk a little about the two smaller acquisitions, we made last quarter I know, it's still early days, but wanted to mobile modular portable storage how are they progressing and more importantly, what does the pipeline of opportunities look like over the next few quarters.

Joe Hanna: I'd like to just click on that just a minute, too, of what Keith said about the regional expansion. I mean, we hired a number of folks this year, and we're putting them into new markets and also markets that are adjacent to operating areas that we are already in. We definitely are anticipating that to be a nice contributor to next year's results. We're really trying to add that horsepower in there to be able to continue to grow the business despite what the market is doing.

Execute a larger number of projects going forward. I think it's too early to tell uh I think, as we said in our prepared remarks, we've done a pretty good job this year, of counterbalancing, some of those headwinds, with all of our growth initiatives, the services side on modulars, getting good Revenue, parental unit, which we're continuing to get and grow and in some of the regional expansion where we have the hiring, and we're beginning to fund equipment purchases to support growth in some regions that for us, are relatively undeveloped and, and where we see longer term opportunity. So, those are the things you've got to lay on the scales as you look at, you know, the pluses and minuses that will uh influence next year.

Yes.

Yes, those were relatively small acquisitions.

We closed them in Q2.

And.

There was one was the modular business and one was a portable storage business.

<unk> in the southeast and so they are.

Daniel Moore: That's really helpful. Last one, and I'll jump out. Maybe just talk a little about the two smaller acquisitions you made last quarter. I know it's still early days, but one in, you know, Mobile Modular, portable storage. How are they progressing? More importantly, what does the pipeline of opportunities look like over the next two quarters?

They're integrated and we're.

So I'd like to just click on that just a minute too. And of what he said about the uh, Regional expansion. I mean, we we hired a number of folks this year and we're putting them into new markets and also markets that are adjacent to operating areas that we are already in. And we definitely are anticipating that to be a nice contributor to to to next year's results. So we're we're you know really trying to add that horsepower in there to be able to continue to grow the business. Despite what the market is doing.

We're happy to have them onboard and they're contributing at this point, we will see.

What the results are.

Next quarter or two progress is a little bit early to.

<unk> really been able to talk much about how they're how they're performing but there's no red flags there at this point.

Joe Hanna: Yeah, those were relatively small acquisitions. We closed them in Q2, and there was one that was a modular business and one that was a portable storage business, located in the Southeast. They're integrated, and we're happy to have them on board, and they're contributing at this point. We'll see what their results are as the next quarter or two progress. It's a little bit early to really be able to talk much about how they're performing, but there's no red flags there at this point.

That's really helpful. Last one, I'll jump out. Um, maybe just talk a little about the two smaller acquisitions we made last quarter. I know it's still early days, but one in, you know, mobile modular portable storage. How are they progressing? And more importantly, what does the pipeline of opportunities look like over the next few quarters?

And then maybe the pipeline comment I think we can say that we're very active.

Our normal process, we have work going on in the field and the new markets that we have a high level of interest in.

I think the pipeline is active and encouraging and it's going to be part of our growth strategy.

Very helpful. Thank you again.

We will take our next question from Marc Riddick with Sidoti. Please go ahead. Your line is open.

Hey, good evening.

So just this one.

Wanted to sort of maybe to piggyback on the prior question.

Yeah, we um, yeah, those were um relatively small Acquisitions. Um, we closed them in Q2 and um, they there was 1 was a modular business and 1 was a portable storage business, uh, located in the Southeast. And so, you know, they're they're integrated and we're, you know, we're happy to have them on board and they're contributing at this point, we'll see, uh, what their results are. You know, it's the next quarter or 2 for grass is a little bit early to, um, really be able to talk much about how they're how they're performing, but there's no red flags there at this point.

Keith Pratt: Maybe the pipeline comment, I think we can say that we're very active in our normal process. We have work going on in the field. We know markets that we have a high level of interest in, and I think the pipeline is active and encouraging, and it's going to be part of our growth strategy.

Question.

<unk> line of questioning maybe you could maybe give a bit of an update as far as cash usage prioritization is just sort of looking into next year.

And particularly around the acquisition pipeline can you maybe talk a little bit about the devaluation that youre seeing now and what does that change.

Changed much over.

And then maybe the pipeline comment. Um, I think we can say that we're very active in our normal process. We've got work going on in the field. We know markets that we have a high level of interest in, and I think the pipeline is active and encouraging, and it's going to be part of our growth strategy.

Maybe the last six months or so and then I have a follow up on the on the personnel side.

Daniel Moore: Very helpful. Thank you again.

Very helpful. Thank you again.

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

Okay, Mark I'll take a crack at that in terms of usage of cash first high level comment I would make this has been a very good year from a free cash flow point of view and if you look at us year to date, we've reduced our debt, we actually slightly lower leverage than where we started the year.

We'll take our next question from Mark Riddick with Sedoti. Please go ahead; your line is open.

Mark Riddick: Hey, good evening.

Keith Pratt: Hi, Mark.

Hey, good evening.

Mark Riddick: I just wanted to sort of maybe piggyback on the prior question and the line of questioning. Maybe give a bit of an update as far as cash usage prioritization as you're sort of looking into next year, particularly around the acquisition sort of pipeline. Can you maybe talk a little bit about the valuation that you're seeing now and whether that's changed much over, you know, maybe over the last six months or so? I have a follow-up on the personnel side.

We managed to pay our dividend and we've completed two small acquisitions one of the factors that has allowed us to do that in addition to just good operating performance from the business, but it's that lower capex that I referenced in the prepared remarks.

And a lot less on new equipment. This year than we did a year ago. So if we look into next year and I touched on this earlier based on fleet utilization, we're probably going to be in a position where we can meet a lot of demand from existing fleet. That's a good thing that may be a positive again from a capex point of view that gives us.

Keith Pratt: Okay. Mark, I'll take a crack at that. In terms of usage of cash, first high-level comment I would make is this has been a very good year from a free cash flow point of view. If you look at us year to date, we've reduced our debt. We're actually slightly lower leverage than where we started the year. We've managed to pay our dividends, and we've completed two small acquisitions. One of the factors that has allowed us to do that, in addition to just good operating performance from the business, is that lower CapEx that I referenced in the prepared remarks. We spent a lot less on new equipment this year than we did a year ago.

So I just I just wanted to sort of maybe piggyback on on, on the the prior uh, question and and the line of questioning maybe could maybe give a bit of an update as far as cash usage. Prioritization is just sort of looking into next year and, uh, particularly around the acquisition sort of pipeline can, maybe talk a little bit about the, the valuation that you seeing now, and what that's, uh, changed much over, uh, you know, maybe over the last 6 months or so. And then I have a, a follow up on the uh, on the Personnel side.

A lot more flexibility with things like M&A and that's why the pipeline is active it's an important part of our strategy.

Briefly on valuations, it's very situationally specific what you are looking at what there is an offer from a business. That's for sale, we try to be very measured in how we look at things lead quality matters to us a lot and the ability to generate future cash from any business that we acquire but there are off.

Keith Pratt: If we look into next year, and I touched on this earlier, based on fleet utilization, we're probably going to be in a position where we can meet a lot of demand from existing fleet. That's a good thing. That may be a positive. From a CapEx point of view, that gives us a lot more flexibility with things like M&A, and that's why the pipeline is active. It's an important part of the strategy. Briefly on valuations, it's very situationally specific what you're looking at, what there is on offer from a business that's for sale. We try to be very measured in how we look at things. Fleet quality matters to us a lot, and the ability to generate future cash from any business that we acquire. There are opportunities out there.

<unk> Dot there will always pay a fair price for a good quality business, but we also know what our walk away is where it doesn't make sense for us and we will simply buy approach the market from other angles.

Okay. Uh, Mark, I'll take a crack at that in terms of usage of cash first. High level of comment I would make, is this has been a very good year from a free cash flow, point of view. And if you look at us year to date, we've reduced our Gap. We actually slightly lower leverage than where we started the year. Um, we've managed to pay out dividends and we've completed 2 small Acquisitions. Um, 1 of the factors that has allowed us to do that. In addition to just good operating performance from the business, but it's that lower capex that I referenced in the prepared remarks. Um, we spent a lot less on new equipment this year than we did a year ago. So if we look into next year and I touched on this earlier based on fleet utility,

Great. Thank you. Thank you for that and then maybe just a little bit of a follow up on the commentary around.

Adding adding folks in tech spend for some opportunities that you that you see.

Are those kind of just sort of.

Short focus as far as and as far as things youre going to be executing on in the short term or is this something that you see.

Keith Pratt: We'll always pay a fair price for a good quality business, but we'll also know what our walkaway is where it doesn't make sense for us, and we'll simply approach the market from other angles.

See opportunity sets going into next year and are there some some areas geographically or otherwise that you are that you're kind of targeting for the potential for new additions both on the human capital side as well as the technology side.

And we'll simply, uh, approach the market from other angles.

Mark Riddick: Great. Thank you for that. Maybe just a little bit of a follow-up on the commentary around adding folks and tech spend for some opportunities that you see. Are those kind of just sort of short focus as far as things you're going to be executing on in the short term, or is this something that you see opportunity sets going into next year? You know, are there some areas that geographically or otherwise that you're kind of targeting for the potential for new additions both on the human capital side as well as the technology side?

Yes, Mark the the hires that we've made this year are definitely long term, we hope to have them be long term resources in the company no short term plans there.

Want those salespeople to get out into the market and really start generating some business over the next several years.

Most of the hires that we made were in the Midwest area in northeast.

But we will continue to.

Add sales people in places that.

That we need them.

Where we see business potential.

And in places that we have resources already that we can leverage to be able to serve the market.

Joe Hanna: Yeah, Mark, the hires that we've made this year are definitely long-term. We hope to have them be long-term resources in the company. No short-term plans there. We want those salespeople to get out into the market and really start generating some business over the next several years. Most of the hires that we made were in the Midwest area and Northeast. We will continue to add salespeople in places that we need them, where we see business potential, and in places that we have resources already that we can leverage to be able to serve the market. Very much long-term strategy, very carefully thought out and implemented, and we're anticipating that's going to be very nice to help our growth.

Great. Thank you. Uh, thank you for that and then maybe just a little bit of a follow-up on on the, the commentary around. Um, uh, adding adding folks, and, and, and text and, uh, for some opportunities that you that you see, uh, are those kind of just sort of um, short Focus, as far as in, as far as things are going to be executing on in the short term. Or is this something that you see? Uh, See uh, opportunity sets going into next year and and you know are there some some areas that geographically or otherwise that you're that you're kind of targeting for for uh the potential for new additions? Both on the on the human capital side as well as the the technology side.

So very much long term strategy very carefully thought out and.

Implemented and.

We're anticipating that's going to be very nice to help our growth.

Excellent and then the last thing I think in your.

Our prepared remarks or maybe it was a response to one of the questions.

Really did a great job as far as bringing us up to speed on maybe.

Education funding.

It really played out through the year are there any ballot initiatives that youre kind of have an eye on our Q.

Next month, we should be aware of as we're thinking about as far as.

Any that are top of mind at the moment or do you sort of feel like we've kind of already have a lot of the main ones locked in already.

Yeah, Mark the, The Hires that we've made this year are definitely long-term, you know, we hope to have them be long-term resources in the company. No. Short-term plans there, uh, we want those sales people to get out into the market and really start generating some business over the next several years. Uh, most of the hires that we made were in the midwest area and Northeast. Uh, but we will continue to, um, add sales people in places that, uh, that we need them. Um, where where we see business potential and in places that we have resources already that we can leverage to be able to serve the market. So very much long term.

Yes, there is no. There is no particular valid issues that that I'm aware of right now that we're concerned about.

Strategy very carefully thought out and implemented, and you know we're anticipating that's going to be very nice to help our growth.

Mark Riddick: Excellent. The last thing I think in your prepared remarks, or maybe as a response to one of the questions, you really did a great job as far as bringing us up to speed on maybe how education funding has really played out through the year. Are there any valid initiatives that you kind of have an eye on or keen next month that we should be aware of or should be thinking about, as far as, you know, is there any that are top of mind at the moment, or do you sort of feel like we kind of already have a lot of the main ones locked in already?

Concerning facilities funding at this point, so I am very pleased with the amount of funding that's in place in the markets that we operate in.

Healthy and.

That funding typically doesn't.

Grow cobwebs that stuff gets implemented and put out into the market as soon as districts can get their selves themselves organized and.

And get the projects underway and we will be right there with them when they do it. So we're very very happy about that and think that it's a good positive.

Joe Hanna: Yeah, there's no particular valid issues that I'm aware of right now that we're concerned about, concerning facilities funding at this point. I mean, I'm very pleased with the amount of funding that's in place in the markets that we operate in. It's very healthy. You know, that funding typically doesn't grow cobwebs. That stuff gets implemented and put out into the market as soon as districts can get themselves organized and get the projects underway. We'll be right there with them when they do it. We're very, very happy about that and think that it's a good positive.

Excellent. And the last last thing I think you you in your prepared with Marshall maybe there's a response to 1 of the questions. I really did a great job as far as bringing this up to speed on maybe how how um education funding um, has has really played out through the year. Uh are there any valid initiatives that you're kind of have an eye on or Keen? Uh next month that we should be aware of be thinking about uh as far as uh as any better top of mind at the moment or do you sort of feel like we kind of already have a lot of the main ones locked in already.

Great. Thank you very much.

Thank you.

And once again, if you would like to ask a question. Please press the star and <unk> on your telephone keypad, we can pause for a moment to allow any further questions to queue.

And ladies and gentlemen that appeared to have been our last question. Let me now turn the call back to Mr. Hannah for any closing remarks.

I'd like to thank everyone for joining us on the call today and for your continuing interest in our company. We look forward to speaking with you again in late February to review, our fourth quarter results.

Yeah. There's no there's no particular ballot issues that that I'm aware of right now that we're concerned about um concerning facilities funding at this point. So um, I mean I'm very pleased with uh the amount of funding that's in place in the markets that we operate in. Um, it's very healthy and um you know that funding typically doesn't uh you know grow cobwebs that stuff gets implemented and put out into the market as soon as districts can get theirselves themselves organized and uh and get the projects underway and we're we'll be right there with them when they do it. So we're very, very happy about that. And think that it's a good positive.

Mark Riddick: Great. Thank you very much.

Great, thank you very much.

Joe Hanna: Thank you.

Operator: If you would like to ask a question, please press the star and one keys on your telephone keypad. We can pause for a moment to allow any further questions to queue. Ladies and gentlemen, that appeared to have been our last question. Let me now turn the call back to Mr. Hanna for any closing remarks.

Thank you.

Okay.

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

And once again, if you would like to ask a question, please press the star and 1 keys on your telephone keypad.

Pause for a moment to allow any further questions to queue.

Joe Hanna: I'd like to thank everyone for joining us on the call today and for your continuing interest in our company. We look forward to speaking with you again in late February to review our fourth quarter results.

And ladies and gentlemen, that appeared to have been our last question. Let me now. Turn the call back to Mr. Hannah for any closing remarks

I'd like to thank everyone for joining us on the call today, and for your continuing interest. In our company, we look forward to speaking with you again in late February to review our fourth quarter results.

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

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