Q2 2026 McGrath RentCorp Earnings Call

July 29, 2026

Speaker #2: Please stand by. Your meeting is about to begin. Ladies and gentlemen, thank you for standing by. Welcome to the McGrath RENTCORP second quarter 2026 earnings call.

Operator: Ladies and gentlemen, thank you for standing by. Welcome to the McGrath RentCorp Q2 2026 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. This conference call is being recorded today, Wednesday, 29 July 2026.

Speaker #2: At this time, all conference participants are in 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 #2: This conference call is being recorded today. Wednesday, July 29th, 2026. Before we begin, note that the matters the company management will be discussing today that are not statements of historical facts are forthlooking 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.

Operator 4: 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. 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: 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. 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.

Speaker #2: These forthlooking 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 #2: 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 #2: Fortlooking statements are made only as of the date hereof. Except as otherwise required by law, we assume no obligation to update any forthlooking statements.

Speaker #2: 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 June 30th, 2026.

Operator 4: 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 30 June 2026. Speaking today will be Phil Hawkins, Chief Executive Officer, and Keith Pratt, Chief Financial Officer. I will now turn the call over to Mr. Hawkins. Go ahead, sir.

Operator: 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 30 June 2026. Speaking today will be Phil Hawkins, Chief Executive Officer, and Keith Pratt, Chief Financial Officer. I will now turn the call over to Mr. Hawkins. Go ahead, sir.

Speaker #2: Speaking today will be Phil Hawkins, Chief Executive Officer, and Keith Pratt, Chief Financial Officer. I will now turn the call over to Mr. Hawkins.

Speaker #2: Go ahead, sir.

Speaker #3: Thank you, Chloe. Good afternoon, everyone. And thank you for joining us today for McGrath RENTCORP's second quarter 2026 earnings call. I am glad to be here to report on our performance over the past quarter and to provide an update on our outlook for this year.

Phil Hawkins: Thank you, Chloe. Good afternoon, everyone, and thank you for joining us today for McGrath RentCorp's Q2 2026 earnings call. I am glad to be here to report on our performance over the last quarter and to provide an update on our outlook for this year. I will discuss current market demand conditions and share our progress on strategic growth initiatives. First, our quarterly results. We were pleased to see rental operations revenues up 6% year over year, driven by continued momentum in our two largest rental businesses. Both Mobile Modular and TRS-RenTelco grew rental revenues and improved utilization sequentially during the quarter. Offsetting these positive rental operations results were lower new equipment sales at Enviroplex and Mobile Modular, as several projects pushed to the H2 of the year. As a result, total company revenues decreased 6% and adjusted EBITDA decreased 4%.

Phil Hawkins: Thank you, Chloe. Good afternoon, everyone, and thank you for joining us today for McGrath RentCorp's Q2 2026 earnings call. I am glad to be here to report on our performance over the last quarter, and to provide an update on our outlook for this year. I will discuss current market demand conditions and share our progress on strategic growth initiatives. First, our quarterly results. We were pleased to see rental operations revenues up 6% year-over-year, driven by continued momentum in our two largest rental businesses. Both Mobile Modular and TRS-RenTelco grew rental revenues and improved utilization sequentially during the quarter. Offsetting these positive rental operations results were lower new equipment sales at Enviroplex and Mobile Modular, as several projects pushed to the H2 of the year. As a result, total company revenues decreased 6% and adjusted EBITDA decreased 4%.

Speaker #3: I will discuss current market demand conditions and share our progress on strategic growth initiatives. First, our quarterly results. We were pleased to see rental operations revenues up 6% year over year, driven by continued momentum in our two largest rental businesses.

Speaker #3: Both Mobile Modular and TRS-RenTelco grew rental revenues and improved utilization sequentially during the quarter. Offsetting these positive rental operations results were lower new equipment sales and Enviroplex at Mobile Modular.

Speaker #3: And as several projects pushed to the second half of the year. As a result, total company revenues decreased 6% and adjusted EBITDA decreased 4%.

Speaker #3: Focusing first on mobile modular, we saw growing momentum in our rental operations, rental revenues grew 2% in the quarter, and bookings increased 11% compared to a year ago.

Phil Hawkins: Focusing first on Mobile Modular, we saw growing momentum in our rental operations. Rental revenues grew 2% in the quarter, and bookings increased 11% compared to a year ago. While demand conditions remain mixed, our larger commercial project opportunities continue to be strong, and activity in smaller local markets has been more stable. We are also having success in the geographic expansion markets, where we added sales coverage and deployed capital. I'm particularly encouraged by the positive operational trends in the modular business. Utilization improved sequentially for the first time since 2022. Units on rent have increased the last four months in a row, and we ended the quarter with more units on rent than at the beginning of the year. With this inflection and higher year-over-year bookings in H1 2026, I feel positive about the outlook for H2 of this year.

Speaker #3: While demand conditions remained mixed, our larger commercial project opportunities continue to be strong and activity in smaller local markets has been more stable. We are also having success in the geographic expansion markets where we added sales coverage, employee capital.

Speaker #3: I'm particularly encouraged by the positive operational trends in the modular business. Utilization improved sequentially for the first time since 2022. Units on rent have increased the last four months in a row, and we ended the quarter with more units on rent than at the beginning of the year.

Speaker #3: With this inflection, and higher year-over-year bookings in the first half of 2026, I feel positive about the outlook for the second half of this year.

Speaker #3: Our services expansion initiatives also have solid momentum. Mobile Modular Plus revenues were up 15% year over year. Site-related services revenues, while down slightly from the quarter, were higher for the first half.

Phil Hawkins: Our services expansion initiatives also have solid momentum. Mobile Modular Plus revenues were up 15% year over year. Site-related services revenues, while down slightly from the quarter, were higher for H1. Looking at the market for new modular sales, overall demand and pipeline activity remained stable and similar to last year. Turning to our portable storage business, rental revenues were flat. We continue to see challenging demand conditions in local commercial construction markets, which are a larger component of the mix for this business. Our team remains focused on getting more units out on rent through expanding sales coverage and targeting adjacent geographic markets. Lastly, turning to TRS, rental revenues continued their impressive growth trajectory and were up 17%. Demand remained healthy across several key end markets, including data centers, aerospace & defense, and semiconductors.

Phil Hawkins: Our services expansion initiatives also have solid momentum. Mobile Modular Plus revenues were up 15% year-over-year. Site-related services revenues, while down slightly from the quarter, were higher for H1. Looking at the market for new modular sales, overall demand and pipeline activity remained stable and similar to last year. Turning to our portable storage business, rental revenues were flat. We continue to see challenging demand conditions in local commercial construction markets, which are a larger component of the mix for this business. Our team remains focused on getting more units out on rent through expanding sales coverage and targeting adjacent geographic markets. Lastly, turning to TRS, rental revenues continued their impressive growth trajectory and were up 17%. Demand remained healthy across several key end markets, including data centers, aerospace & defense, and semiconductors.

Speaker #3: Looking at the market for new modular sales, overall demand and pipeline activity remained stable and similar to last year. Turning to our portable storage business, rental revenues were flat.

Speaker #3: We continue to see challenging demand conditions in local commercial construction markets, which are a larger component of the mix for this business. Our team remains focused on getting more units out on rent through expanding sales coverage and targeting adjacent geographic markets.

Speaker #3: Lastly, turning to TRS, rental revenues continued their impressive growth trajectory and were up 17%. Demand remained healthy across several key end markets. Including data centers aerospace and defense, and semiconductors.

Speaker #3: Our team is executing well in a strong market environment and is entering the second half of the year with solid momentum in the business.

Phil Hawkins: Our team is executing well in a strong market environment and is entering H2 of the year with solid momentum in the business. Summing up, across the McGrath businesses, we delivered rental operations revenue growth in a mixed demand environment. I am pleased with our momentum going into H2 of the year. Our modular geographic and services expansion initiatives are providing us with several growth opportunities that are not dependent on recovery in the non-residential construction market. Our strong balance sheet gives us the flexibility to fund organic growth, support a steadily increasing dividend, and retain capacity for strategic M&A and share repurchases. I would like to thank our team for your dedication, deep expertise, and customer engagement that are truly competitive differentiators. Our customers and shareholders for your trust and investment in our company.

Speaker #3: Summing up, across the McGrath businesses, we delivered rental operations revenue growth in a mixed demand environment. I am pleased with our momentum going into the second half of the year.

Speaker #3: Our modular geographic and services expansion initiatives are providing us with several growth opportunities that are not dependent on a recovery in the nonresidential construction market.

Speaker #3: And our strong balance sheet gives us the flexibility to fund organic growth, support a steadily increasing dividend, and retain capacity for strategic M&A and share repurchases.

Speaker #3: I would like to thank our team for your dedication, deep expertise, and customer engagement that are truly competitive differentiators. And our customers and shareholders for your trust and investment in our company.

Speaker #3: With that, I will turn the call over to Keith. We'll take you through the financial details of our quarter, and our updated outlook for the full year.

Phil Hawkins: 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.

Speaker #4: Thank you, Phil, and good afternoon, everyone. As Phil highlighted, second quarter results reflected continuing growth in rental operations revenue, offset by lower sales revenue at Enviroplex and Mobile Modular.

Keith Pratt: Thank you, Phil, and good afternoon, everyone. As Phil highlighted, Q2 results reflected continuing growth in rental operations revenue, offset by lower sales revenue at Enviroplex and Mobile Modular. Total revenues decreased 6% to $221 million and adjusted EBITDA decreased 4% to $83 million. Reviewing Mobile Modular's operating performance as compared to Q2 2025, total revenues for Mobile Modular decreased 4% to $150 million and adjusted EBITDA decreased 4% to $51 million. Rental operations showed steady progress and saw 2% higher rental revenues driven by growth from our commercial customer base and 8% higher rental-related services revenues. Inventory center costs increased by $2.1 million as we invested to prepare equipment to meet stronger demand and higher shipment levels in H2. This expense compressed rental margins to 55%, down from 58% a year ago.

Speaker #4: Total revenues decreased 6% to $221 million, and adjusted EBITDA decreased 4% to $83 million. Reviewing mobile modular's operating performance as compared to the second quarter of 2025, total revenues for mobile modular decreased 4% to $150 million, and adjusted EBITDA decreased 4% to $51 million.

Speaker #4: Rental operations showed steady progress and saw 2% higher rental revenues, driven by growth from our commercial customer base, and 8% higher rental-related services. Costs increased by $2.1 million as we invested to prepare equipment to meet stronger demand and higher shipment levels in the second half.

Speaker #4: This expense compressed rental margins to 55%, down from 58% a year ago. Sales revenues decreased $9.3 million, to $31.2 million, primarily due to lower new sales projects during the quarter as several projects shifted to the second half of the year.

Keith Pratt: Sales revenues decreased $9.3 million to $31.2 million, primarily due to lower new sales projects during the quarter, as several projects shifted to H2 of the year. Average fleet utilization was 70.1%, compared to 73.7% a year ago. Utilization modestly improved from 70% in Q1 and ended Q2 at 70.6%, as shipments exceeded returns during the quarter. While these were small incremental changes, we view them as positive indicators as we return to growth in units on rent. Revenue per unit trends were favorable. Q2 monthly revenue per unit on rent increased 7% to $902. For new shipments over the last 12 months, the average monthly revenue per unit increased 7% to $1,252. There is still a positive pricing tailwind opportunity as our fleet turns. We continue to make progress with our modular services offerings.

Speaker #4: Average fleet utilization was 70.1%, compared to 73.7% a year ago. Utilization modestly improved from 70% in the first quarter and ended the second quarter at 70.6%, as shipments exceeded returns during the quarter.

Speaker #4: While these were small incremental changes, we view them as positive indicators as we return to growth in units on rent. Revenue per unit trends were favorable.

Speaker #4: Second quarter monthly revenue per unit on rent increased 7% to $902. For new shipments over the last 12 months, the average monthly revenue per unit increased 7% to $1,252.

Speaker #4: There is still a positive pricing tailwind opportunity as our fleet churns. We continue to make progress with our modular services offerings, mobile modular plus revenues increased to 10.5 million, from 9.2 million a year earlier.

Keith Pratt: Mobile Modular Plus revenues increased to $10.5 million from $9.2 million a year earlier. Site-related services revenues were $6 million, compared to $6.5 million in the prior year, but remained above 2025 on a year-to-date basis. Turning to the review of portable storage. Total revenues for portable storage increased 1% to $24 million, and adjusted EBITDA was $8 million, a decrease of 23% compared to the prior year. Rental revenues were $17 million, flat compared to last year, and rental margins were 80%, down from 83% a year earlier. As Phil mentioned, demand conditions in small local commercial construction markets remain challenging. Adjusted EBITDA was impacted by higher fleet preparation costs, pressure on rental-related services margins in a competitive environment, and investments in sales coverage to support future growth. Average utilization for the quarter was 58.3%, compared to 61.1% a year ago. Turning now to the review of TRS-RenTelco.

Speaker #4: Site-related services revenues were 6 million, compared to 6.5 million in the prior year, but remained above 2025 on a year-to-date basis. Turning to the review of portable storage.

Speaker #4: Total revenues for portable storage increased 1% to $24 million. And adjusted EBITDA was 8 million, a decrease of 23% compared to the prior year.

Speaker #4: Rental revenues were 17 million, flat compared to last year, and rental margins were 80%, down from 83% a year earlier. As Phil mentioned, demand conditions in small local commercial construction markets remain challenging.

Speaker #4: Adjusted EBITDA was impacted by higher fleet preparation costs pressure on rental-related services margins in a competitive environment, and investment in sales coverage to support future growth.

Speaker #4: Average utilization for the quarter was $58.3%, compared to $61.1% a year ago. Turning now to the review of TRS and telco, TRS delivered another strong quarter.

Keith Pratt: TRS delivered another strong quarter, with total revenues up 17% to $43 million and adjusted EBITDA up 29% to $25 million. Rental revenues increased 17% to $32 million, benefiting from improved demand conditions, including projects supporting data center build-outs. Rental margins improved to 48% from 44% a year ago. Average utilization for the quarter was 68.1%, up from 64.8% a year ago. TRS utilization ended the quarter at 68.9%, our highest utilization level since Q1 2021. Sales revenues increased 13% to $8.7 million, and gross margins were 66%, compared to 47% a year ago. Lastly, on Enviroplex. Compared to a very strong Q2 2025, Enviroplex total sales revenue decreased to $4.6 million from $19.9 million, and adjusted EBITDA declined to a loss of $0.5 million from a profit of $4.3 million.

Speaker #4: With total revenues up 17% to $43 million, and adjusted EBITDA up 29% to $25 million. Rental revenues increased 17% to $32 million. Benefiting from improved demand conditions including projects supporting data center build-outs.

Speaker #4: Rental margins improved to 48% from 44% a year ago. Average utilization for the quarter was $68.1%, up from $64.8% a year ago. TRS utilization ended the quarter at 68.9%.

Speaker #4: This was our highest utilization level since the first quarter of 2021. Sales revenues increased 13% to $8.7 million, and gross margins were 66%, compared to 47% a year ago.

Speaker #4: Lastly, on EnviroPlex, compared to a very strong second quarter in 2025, EnviroPlex total sales revenue decreased to $4.6 million, from $19.9 million. And adjusted EBITDA declined to a loss of $0.5 million, from a profit of $4.3 million.

Speaker #4: The decline was primarily driven by project timing, with several project completions shifting to the second half of the year. The remainder of my comments will be on a total company basis.

Keith Pratt: The decline was primarily driven by project timing, with several project completions shifting to the H2 of the year. The remainder of my comments will be on a total company basis. Q2 selling and administrative expenses increased $2.9 million to $56.4 million, primarily due to investments to support our modular geographic expansion. Interest expense was $7.1 million, a decrease of $0.7 million as a result of lower interest rates during the quarter. The Q2 provision for income taxes was based on an effective tax rate of 27%, compared to 27.3% a year earlier. Turning to our year-to-date cash flow highlights. Net cash provided by operating activities was $106 million, compared to $110 million last year. Rental equipment purchases were $124 million, compared to $50 million last year, as we increased investment in modular geographic expansion opportunities and to support higher demand at TRS.

Speaker #4: Second quarter selling and administrative expenses increased 2.9 million, to $56.4 million. Primarily due to investments to support our modular geographic expansion. Interest expense was $7.1 million, a decrease of 0.7 million, as a result of lower interest rates during the quarter.

Speaker #4: The second quarter provision for income taxes was based on an effective tax rate of 27%, compared to 27.3% a year earlier. Turning to our year-to-date cash flow highlights, net cash provided by operating activities was $106 million.

Speaker #4: Compared to $110 million last year. Rental equipment purchases were $124 million. Compared to $50 million last year, as we increased investment in modular geographic expansion opportunities and to support higher demand at TRS.

Speaker #4: In addition to investments in new fleet, healthy cash generation allowed us to pay $25 million in shareholder dividends and to complete $27 million of share repurchases.

Keith Pratt: In addition to investments in new fleet, healthy cash generation allowed us to pay $25 million in shareholder dividends and to complete $27 million of share repurchases. At quarter end, we had net borrowings of $590 million, and the ratio of funded debt to the last 12 months' actual adjusted EBITDA was 1.65:1. Lastly, we are updating our outlook for 2026. The midpoints for our revenue and adjusted EBITDA ranges are unchanged, while we tightened up the ranges now that we are halfway through the year. We have also increased our gross rental equipment CapEx to support incremental investment in TRS. Relative to our original outlook, we continue to expect strength in the modular business. Stronger than expected performance at TRS should offset weaker performance at portable storage. At Enviroplex, we continue to expect performance to be similar to 2024.

Speaker #4: At quarter end, we had net borrowings of $590 million, and the ratio of funded debt to the last 12 months' actual adjusted EBITDA was 1.65 to 1.

Speaker #4: Lastly, we are updating our outlook for 2026. The midpoints for our revenue and adjusted EBITDA ranges are unchanged. While we tightened up the ranges, now that we are halfway through the year.

Speaker #4: We have also increased our gross rental equipment CapEx to support incremental investment in TRS. Relative to our original outlook, we continue to expect strength in the modular business.

Speaker #4: Stronger than expected performance at TRS should offset weaker performance at portable storage. And at EnviroPlex, we continue to expect performance to be similar to 2024.

Speaker #4: We now expect total revenue between $955 and $985 million, adjusted EBITDA between $363 and $375 million, and gross rental equipment capital expenditures between $200 and $220 million.

Keith Pratt: We now expect total revenue between $955 and 985 million, adjusted EBITDA between $363 and 375 million, and gross rental equipment capital expenditures between $200 and 220 million. As we enter the H2 of the year, our focus remains on disciplined execution, prudent capital allocation, and delivering long-term shareholder value. That concludes our prepared remarks. Chloe, you may now open the lines for questions.

Speaker #4: As we entered the second half of the year, our focus remains on disciplined execution, prudent capital allocation, and delivering long-term shareholder value. That concludes our prepared remarks.

Speaker #4: Chloe, you may now open the lines for questions.

Speaker #1: Thank you. The floor is now open for questions. At this time, if you have a question or comment, please press star 1 on your telephone keypad.

Operator 4: Thank you. The floor is now open for questions. At this time, if you have a question or comment, please press star one on your telephone keypad. If at any point your question is answered, you may remove yourself from the queue by pressing star two. Again, we ask that you pick up your handset when posing your questions to provide optimal sound quality. Thank you. Our first question is coming from Manav Patnaik with Barclays. Your line is open.

Operator: Thank you. The floor is now open for questions. At this time, if you have a question or comment, please press star one on your telephone keypad. If at any point your question is answered, you may remove yourself from the queue by pressing star two. Again, we ask that you pick up your handset when posing your questions to provide optimal sound quality. Thank you. Our first question is coming from Manav Patnaik with Barclays. Your line is open.

Speaker #1: If at any point your question is answered, you may remove yourself from the queue by pressing star 2. Again, we ask that you pick up your handset when posing your questions to provide optimal sound quality.

Speaker #1: Thank you. Our first question is coming from Manav Patnak with Barclays. Your line is open.

Speaker #3: Hi, this is Ronan Kennedy from Manav. Thank you for taking our questions. You noted shipments exceeded returns in each month of the quarter. Could you provide some color on the extent to which that was driven primarily by large commercial projects and specific end markets versus the regional expansion efforts or broader improvement across the customer base?

Ronan Kennedy: Hi, this is Ronan Kennedy. I'm from Manav. Thank you for taking our questions. You noted shipments exceeded returns in each month of the quarter. Could you provide some color on the extent to which that was driven primarily by large commercial projects and specific end markets versus the regional expansion efforts or broader improvement across the customer base? I'm also interested in your comments as to whether that trend has continued into July. A final part to the question, if I may. If not mistaken, I think Phil had mentioned inflection, so curious as to how you would characterize it. Is this the long-awaited inflection in utilization? Are we in the recovery? Your thoughts there.

Speaker #3: Also interested in your comments as to whether that trend has continued into July and a final part to the question if I may. If not mistaken, I think Phil had mentioned inflection.

Speaker #3: So curious as to how you would characterize it. Is this the long-awaited inflection in utilization? Are we in the recovery? And your thoughts there?

Speaker #2: Sure, Ronan. I'll start there. And then Keith can weigh in a little bit. Starting with the utilization trend, I'm excited about the sequential utilization improvement that we've had in modulars here in the second quarter.

Phil Hawkins: Sure, Ronan. I'll start there, and then Keith can weigh in a little bit. Starting with the utilization trend, I'm excited about the sequential utilization improvement that we've had in modulars here in the Q2. As we mentioned, that's the first time in four years. It's really being driven by more mega project wins, as you mentioned, commercial, and a combination of that with our geographic expansion initiatives. That's giving a nice lift to our commercial utilization and partially offsetting some net returns in the education side. Kind of jumping to your inflection, I think we feel good that kind of the trend's changed. We may not see this move up every single quarter consistently, but we do believe we turned the corner on a trend on the modular side and have strong momentum entering the H2.

Speaker #2: As we mentioned, that's the first time in four years. It's really being driven by more mega project wins as you mentioned, commercial, and a combination of that with our geographic expansion initiatives.

Speaker #2: So that's giving a nice lift to our commercial utilization and partially offsetting some net returns in the education side. I'm kind of jumping to your inflection.

Speaker #2: I think we feel good that kind of the trends changed. We may not see this move up every single quarter consistently, but we do believe we've turned the corner on a trend on the modular side, and have strong momentum entering the second half of the year.

Speaker #2: Keith, anything you'd like to add there?

Phil Hawkins: Keith, anything you'd like to add there?

Speaker #4: Yeah. Again, we'd emphasize these are very encouraging signs, but they're just the beginning of a turn. I think Phil is spot on with saying we want to build on this, but it's small shifts, and we hope to build on that as we go forward.

Keith Pratt: Yeah. Again, we'd emphasize these are very encouraging signs, but they're just the beginning of the turn. I think Phil is spot on with saying we want to build on this, but it's small shifts and we hope to build on that as we go forward. I don't think it'll necessarily be linear every single month, but it's definitely a shift in the trend that we've seen over a number of quarters and over a number of years.

Speaker #4: I don't think it'll necessarily be linear every single month, but it's definitely a shift in the trend that we've seen over a number of quarters and over a number of years.

Speaker #3: Got it. Thank you. And then obviously continued weakness within portable storage. I mean, what is it beyond the end market weakness and the bifurcation in the market that is consistently being spoken to by your peers and reflected in the industry data?

Ronan Kennedy: Got it. Thank you. Obviously continued weakness within portable storage. I mean, what is it beyond the end market weakness and the bifurcation in the market that is consistently being spoken to by your peers and reflected in industry data? Is there anything else beyond end market weakness? Is there certain things happening in certain geographies or exposures, competitive dynamics? Are there leading indicators we can look to to suggest perhaps it improves in 2027 versus remaining stuck in the current demand dynamics?

Speaker #3: Is there anything else beyond end market weakness? Are there certain things happening in specific geographies or exposures, or competitive leading indicators we can look to that suggest perhaps it improves?

Speaker #3: In '27 versus remaining stuck in the current? Demand dynamics.

Speaker #2: Sure, I can take that. I think that's consistent, based on portable storage all around that smaller local market project dynamic that we've been talking about for several quarters, and combined lower. So, a highly competitive market—lots of people trying to get units out on rent.

Phil Hawkins: Sure, I can take that. I think the consistent themes for portable storage are all around that smaller local market project dynamic that we've been talking about for several quarters. Combined with industry utilization being lower, so a highly competitive market, lots of people trying to get units out on rent. Nothing's changed there. There's not any regional dynamics or differences that I would call out as material. It's really those two macro themes, and I think you're really talking about needing improvement in the non-residential construction, those small local project markets before we see any kind of meaningful move there. That would be a nice accelerator for portable storage and modules when it happens. We're not expecting that to take place this year.

Speaker #2: So, nothing's changed there. There aren't any regional dynamics or differences that I would call out as material. It's really those two macro themes. And I think you're really talking about needing improvement in non-residential construction, those small local project markets, before we see any kind of meaningful move there.

Speaker #2: That would be a nice accelerator for portable storage and modulars when it happens. We're not expecting that to take place this year.

Speaker #3: Got it. Thank you. And then can you remind us if you have either characterized or provided color around your exposure to those large long-duration projects, whether it be mega and also data center specific?

Ronan Kennedy: Got it. Thank you. Can you remind us, if you have either characterized or provided color around your exposure to those large long duration projects, whether it be mega and also data center specific?

Speaker #2: Yeah. We haven't quantified that, Ronan, but I think what I would say there is we're a meaningful part of our new business volume, and the bookings there, as we've talked about, have remained strong.

Phil Hawkins: Yeah, we haven't quantified that, Ronan, but I think what I would say there is they're a meaningful part of our new business volume. The bookings there, as we've talked about, have remained strong. The thing I like to highlight is those projects really play directly to our strengths, the deep experience of our team, capabilities of our operating infrastructure, and the scale of our modular solutions offerings. There's really very few competitors that can bring all that together in the way we can. The other opportunity with those mega projects, data centers in particular, it's an opportunity to bring all of our rental products to that site. Got everything from modular buildings, modular kitchens, dormitories, and electronic test equipment in the case of data centers. It's important, meaningful part of the new business, small on the scale of the overall fleet and revenue mix.

Speaker #2: The thing I’d like to highlight is those projects really play directly to our strengths: the deep experience of our team, the capabilities of our operating infrastructure, and the scale of our modular solutions offerings.

Speaker #2: There's really very few competitors. They can bring all that together in the way we can. The other opportunity with those mega projects, data centers in particular, it's an opportunity to bring all of our rental products to that site.

Speaker #2: So got everything from modular buildings to modular kitchens, dormitories, and electronic test equipment in the case of data centers. So it's important, meaningful part of the new business, small in the scale of the overall fleet and revenue mix.

Speaker #2: Keith, anything you want to add there?

Phil Hawkins: Keith, anything you want to add there?

Speaker #4: Yeah. I think that's a good summary. And Ronan, as we track the data, you'll see in our IR pack, we've got a good view of the different end markets that we serve.

Keith Pratt: Yeah, I think that's a good summary. Ronan, as we track the data, you'll see in our IR pack, we've got a good view of the different end markets that we serve. We just don't have mega project or even data centers as an identified item. Sometimes it's captured in our systems as another project with a large contractor that we have a relationship with and frequently do projects with. Again, I think Phil's characterized it appropriately. It's a strong part of the new business flow. We have a big fleet, and so it takes a lot to move the needle on that big fleet.

Speaker #4: We just don't have mega project or even data centers as an identified item. Sometimes it's captured in our systems as another project with a large contractor that we have a relationship with and frequently do projects with.

Speaker #4: So again, I think Phil's characterized it appropriately. It's a strong part of the new business flow. But we have a big fleet, and so it takes a lot to move the needle on that big fleet.

Speaker #3: Got it. Thank you. And if I may, I'll just finish with a question, but it's a multi-parter. On the sales decline, can you help us think through how much of that was from Environplex versus Mobile Modular?

Ronan Kennedy: Got it. Thank you. If I may, I'll finish with a question, but a multipart on the sales decline. Are you helping with how to think how much of that was the Enviroplex versus the Mobile Modular? I think you'd indicated it was primarily due to lower used sales and several modular sales transactions that were expected in the year shifted into the second half. Any further color or context on the drivers there? What gives you confidence in that timing shift? Is there anything to read through with regards to broader demand? Is it sales activity tends to be more sensitive to project timing and customer CapEx decisions in rental? Anything to be mindful of-

Speaker #3: And then I think you indicated it was primarily due to lower use sales and several modular sales transactions that were expected in the year shifted into the second half.

Speaker #3: So, any further color or context on the drivers there? And then what gives you confidence in that timing shift? Is there anything to read through with regards to broader demand?

Speaker #3: Is it sales activity tends to be more sensitive to project timing and customer capex decisions and rental? Anything to be mindful of to give further context to that sales decline?

Keith Pratt: Yeah

Ronan Kennedy: to give further context to that sales decline.

Speaker #4: Sure. Absolutely. I'll jump in and sort of get the topic started. Really, what we ran into are things that we often see in this part of the business.

Keith Pratt: Sure. Absolutely. I'll jump in and sort of get the topic started. Really what we ran into are things that we often see in this part of the business, these are new sales projects at Enviroplex or on the modular side of the business, frequently we'll run into site readiness issues. This could be the customer has to get a permit. It could be they're dealing with issues that have to be completed before we start, like foundation work, things like that. At the end of a project, there are also other things that have to be done before we complete the project. An example would be the local utility putting a power hookup at the site. These are things we ran into.

Speaker #4: And these are new sales projects at Enviroplex or on the modular side of the business. And frequently, we'll run into site readiness issues. This could be the customer has to get a permit.

Speaker #4: It could be they're dealing with issues that have to be completed before we start, like foundation work—things like that. And then, at the end of a project, there are also other things that have to be done before we complete the project.

Speaker #4: An example would be the local utility putting a power hookup at the site. So these are things we run into. I would say when we looked at this quarter, we had several of those that impacted projects that were a little larger.

Keith Pratt: I would say when we looked at this quarter, we had several of those that impacted projects that were a little larger and caused them to shift. In some case, the shift is just a matter of weeks. In others, it's several months. These are all projects that we have under contract. We're going to complete them. I think the cadence by quarter was maybe a little different from what we've seen in the past and a little bit different maybe from what we expected. Nothing highly unusual in terms of the factors that caused the delays. That would be the sort of overall comment. Phil, I don't know if there's anything you'd like to add.

Speaker #4: And caused them to shift. In some case, the shift is just a matter of weeks. In others, it's several months. But these are all projects that we have under contract.

Speaker #4: We're going to complete them. And I think the cadence by quarter was maybe a little different from what we've seen in the past and a little bit different maybe from what we expected.

Speaker #4: But not nothing highly unusual in terms of the factors that cause the delays. That would be the sort of overall comment. Phil, I don't know if there's anything you'd like to add.

Speaker #2: I think you described it well. Maybe I'll just add that these aren't projects being canceled and falling out of the pipeline, just completion dates shifting from when we originally expected them.

Phil Hawkins: I think you described it well. Maybe I'll just add, these aren't projects canceling and falling out of the pipeline, just completion date shifting from when we originally expected it. There's really nothing in the underlying market demand that we're worried about. We really see that as being solid, consistent with where it was a year ago. I'm sure it's just the size and scope of these sale projects that sometimes are difficult to predict given things outside of our scope on the site.

Speaker #2: There's really nothing in the underlying market demand that we're worried about. We really see that as being solid and consistent—where it was a year ago.

Speaker #2: It's really just the size and scope of these sale projects that sometimes are difficult to predict, given things outside of our scope on the site.

Speaker #4: Yeah. We did foreshadow, Ronan, that Enviroplex would have a lower sales year. We've commented on that back in February. And again, just to calibrate things, Enviroplex had a very strong revenue year in 2025.

Keith Pratt: Yeah. We did foreshadow, Ronan, that Enviroplex would have a lower sales year. We commented on that back in February. Again, just to calibrate things, Enviroplex had a very strong revenue year in 2025. They had $57 million in revenue. We commented we thought this year would be much closer to 2024 when they did $46 million. We've still got that same view. If you look year to date, we just haven't recognized a lot of those sales. For Enviroplex, we've recognized $8 million year to date. A year ago, it was $27 million year to date. A big part of the difference this year is the timing around those Enviroplex sales. There will be less of them for the full year, and they're definitely more weighted to the second half.

Speaker #4: They had 57 million in revenue. We commented we thought this year would be much closer to 2024 when they did 46 million. We've still got that same view.

Speaker #4: If you look year to date, we just haven't recognized a lot of those sales. For Enviroplex, we've recognized 8 million year to date. A year ago, it was 27 million year to date.

Speaker #4: So a big part of the difference this year is the timing around those Enviroplex sales. There will be less of them for the full year.

Speaker #4: And they're definitely more weighted to the second half. And then with modulars, sort of similar comments, but not as big of a shift in the numbers.

Keith Pratt: With Modulars, sort of similar comments, but not as big of a shift in the numbers.

Speaker #3: Got it. Thank you very much, both of you, for all of that greatly appreciated. I'll pass it on now. Thank you.

Ronan Kennedy: Got it. Thank you very much, both of you for all of that. Greatly appreciate it. I'll pass it on now. Thank you.

Speaker #1: We'll take our next question from Scott Schneeburger with Oppenheimer. Your line is open.

Operator 4: We'll take our next question from Scott Schneeberger with Oppenheimer. Your line is open.

Operator: We'll take our next question from Scott Schneeberger with Oppenheimer. Your line is open.

Speaker #5: Thank you. Good afternoon. I think I'll start. In mobile modular, in rental, your slide 33 always one of attention for pricing. It looks like you have a spread of 39% from total portfolio on rent versus trailing 12 months of modulars on rent.

Scott Schneeberger: Thank you. Good afternoon. I think I'll start in Mobile Modular in rental. Your slide 33 always one of attention for pricing. It looks like you have a spread of 39% from total portfolio on rent versus trailing 12 months of Modulars on rent. Still very, very strong on that spread. Could you speak to that and to the spot pricing, and maybe differentiate large and small projects in that outlook?

Speaker #5: So, still very, very strong on that spread. Could you speak to that and to the spot pricing, and maybe differentiate large and small projects in that?

Speaker #5: Oh, thanks.

Speaker #4: Yeah. Scott, I'll jump in and take a crack at it. I think you're correct with the observations. There's still a good spread. Between the average revenue per unit on rent and then what we're seeing with shipments over the last 12 months, and that's we do that as a good thing for the business to sort of positive tailwind over time.

Keith Pratt: Yeah. Scott, I'll jump in and take a crack at it. I think you're correct with the observations. There's still a good spread between the average revenue per unit on rent, and then what we're seeing with shipments over the last 12 months. We view that as a good thing for the business, a sort of positive tailwind over time. A couple of things at play. I would say spot pricing, it kind of varies around the country. It varies by type of product. It varies by length of contract. All those things go into the mix. It's a fairly complicated algorithm when you look at understanding pricing at a very granular level. The way we would characterize pricing that we've been experiencing is overall fairly stable. There are some pluses and minuses in different categories and different regions, and that's typical in the business, but overall, relatively stable.

Speaker #4: A couple of things at play. I would say spot pricing, it kind of varies around the country. It varies by type of product. It varies by length of contract.

Speaker #4: All those things go into the mix. It's a fairly complicated algorithm when you look at understanding pricing at a very granular level. But the way we would characterize pricing that we've been experiencing is, overall, fairly stable.

Speaker #4: There are some pluses and minuses in different categories and different regions and that's typical in the business. But overall, relatively stable. And then the services piece is really something we've been working to grow over the last few years.

Keith Pratt: The services piece is really something we've been working to grow over the last few years, and that's giving us more revenue opportunity per unit. We're being successful in achieving that with the new shipments, and it's gradually working its way into the installed base of rental units. All those trends are things we've seen for many quarters, and they continue to be healthy, and we're very pleased about that. I don't think there's anything unusual regarding mega project or small local markets. There are dynamics around term, size of project that can influence how we view the pricing that's appropriate, but those are all normal things we and I think others take into consideration when they look at new business.

Speaker #4: And that's giving us more revenue opportunity per unit. We're being successful in achieving that with the new shipments. And it's gradually working its way into the installed base of rental units.

Speaker #4: So all those trends are things we've seen for many quarters. They continue to be healthy. And we're very pleased about that. I don't think there's anything unusual regarding mega project or small local markets.

Speaker #4: There are dynamics around term, size of project, that can influence how we view the pricing that's appropriate. But those are all normal things we and I think others take into consideration when they look at new business.

Speaker #5: Great. Thanks. Appreciate that. I'm going to crack the TRS. Oh, I'm sorry. Phil, were you saying something? All right. Thanks, Phil. Yeah. No, I want to go over and dig into TRS because I think we saw acceleration from low teams now into high teams year over year.

Scott Schneeberger: Okay, thanks. Appreciate that. I'm going to crack the TRS. Oh, I'm sorry. Phil, were you saying something?

Scott Schneeberger: Okay, thanks. Appreciate that.

Phil Hawkins: I'm going to crack the TRS.

Scott Schneeberger: Oh, I'm sorry. Phil, were you saying something?

Phil Hawkins: No, go ahead, Scott.

Scott Schneeberger: Thanks, Phil. Yeah, I want to go over and dig into TRS because I think we saw acceleration from low teens now into high teens year-over-year, and that's against a tough comp revenue growth. Very impressive to see. I think if you could just elaborate on the trends there, the sustainability of the trends, and a little bit of extra CapEx in that business. If there's a lot of sustainability, yeah, I think it certainly justifies that CapEx and then some. If you could just speak on that decision-making process and how hot that market is for you. Thanks.

Speaker #5: And that's against a tough comp around revenue growth. So very impressive to see. I think if you could just elaborate on the trends there, the sustainability of the trends, and a little bit of extra capex in that business, if there's a lot of sustainability, yeah, I think it's certainly justifies that capex.

Speaker #5: And then some. So if you could just speak on that decision-making process and how hot that market is for you. Thanks.

Speaker #2: Yeah, I'm happy to answer that, Scott. We really see that demand remaining strong across several end markets, and there's no immediate sign of slowing.

Phil Hawkins: Yeah, I'm happy to answer that, Scott. We really see that demand remaining strong across several end markets, there's no immediate sign of slowing. Data centers remain a meaningful contributor to that growth. Feels like we're still in the early to mid innings of that data center build-out. We ended utilization higher, our equipment levels are still lower than they've been over the last several years. There's opportunity to add CapEx and participate in that growth. We don't have a crystal ball for any of this, our teams are very familiar in managing these technology cycles. We know the things to watch for, they manage them well. We believe we've got good runway, feel good about the place in the cycle we're in.

Speaker #2: Data centers remain a meaningful contributor to that growth. It feels like we're still in the early to mid-innings of that data center build-out. We ended utilization higher, but our equipment levels are still lower than they've been.

Speaker #2: Over the last several years, so there's opportunity to add capex and participate in that growth. We don't have a crystal ball for any of this, but our teams are very familiar in managing these technology cycles.

Speaker #2: We know the things to watch for, and they manage them well. So we believe we've got good runway, feel good about the place in the cycle we're in, and maybe the thing I'll just add specific to TRS and data centers is we still don't have a good feel for what the ongoing maintenance requirements will be for electronic test equipment as these things are installed, and there's some type of maintenance and refresh process over time.

Phil Hawkins: Maybe the thing I'll just add specific to TRS and data centers is we still don't have a good feel for what the ongoing maintenance requirements will be for electronic test equipment as these things are installed, there's some type of maintenance and refresh process over time. Nothing there that gives us any concern.

Speaker #2: So nothing there that gives us any concern.

Speaker #5: Yeah, good last point there. And certainly a nice opportunity for your long term. I'll just do one more. You've been buying back stock—first quarter, second quarter.

Scott Schneeberger: Yeah. Good last point there, certainly a nice opportunity for you long term. I'll just do one more. You've been buying back stock Q1, Q2 at a decent clip. Just curious, the rationale of buybacks and consideration for M&A. Obviously, you're doing your geographical build-out with investment, which can impact margins. You can kind of bypass that on successful acquisitions. Just kind of curious on the strategy of the continued geographic expansion, organic versus M&A, then just a little comment on buybacks. Thanks.

Speaker #5: At a decent clip, just curious the rationale of buybacks and consideration for M&A. Obviously, you're doing your geographical build-out with investment, which can impact margins.

Speaker #5: You can kind of bypass that on successful acquisitions, so I'm just kind of curious about the strategy for continued geographic expansion—organic versus M&A.

Speaker #5: And then just a little comment on buybacks. Thanks.

Speaker #2: Keith, do you want to start with buybacks and then I'll talk about geographic expansion and M&A?

Phil Hawkins: Keith, do you want to start with my point, and then I'll talk about geographic expansion and M&A?

Speaker #4: Okay. Yeah. Scott, it's an important topic, and one that we're frequently reviewing, which is capital allocation opportunities and which we should fund. I think the good news is leverage at 1.65 at the end of June.

Keith Pratt: Okay. Yeah. Scott, it's an important topic and one that we're frequently reviewing, which is capital allocation opportunities and which we should fund. I think the good news is leverage at 1.65 at the end of June. We have a lot of flexibility, and we still want to be prudent. You're seeing the focus on organic investment. We have good opportunities at Modulars and TRS, and we're funding them, and at the same time trying to manage utilization very carefully. Still, in light of market conditions, it's obviously a different story in each line of business. That's the first comment. We did one small tuck-in. As you may recall, we commented on it on the April call. That deal was closed back on April first. We're going to continue to work the pipeline, so we can elaborate on that.

Speaker #4: We have a lot of flexibility. And we still want to be prudent. And you're seeing the focus on organic investment. We have good opportunities at modulars and TRS, and we're funding them.

Speaker #4: And at the same time, trying to manage utilization very carefully. But still, in light of market conditions, it's obviously a different story in each line of business.

Speaker #4: So that's the first comment. We did one small tuck-in you may recall we commented on it on the April call. That deal was closed back on April 1st.

Speaker #4: We're going to continue to work the pipeline. Phil can elaborate on that. And then we look at the buyback as another tool in the toolkit.

Keith Pratt: We look at the buyback as another tool in the toolkit. We don't telegraph how much and when but we've now purchased shares both in Q1 and Q2. We've purchased a total of 250,000 shares year to date, and we're in a position to do more. Our authorization, which was put in place in September 2024, was for 2 million shares. We've still got 1.75 million shares available under that authorization for repurchase. Clearly another tool in the toolkit. The dividend, we've got a good track record of a healthy dividend and an ability to increase it steadily as the business continues to grow and be profitable.

Speaker #4: We don't telegraph how much and when, but we've now purchased shares both in the first and second quarter. We've purchased a total of 250,000 shares year to date.

Speaker #4: And we're in a position to do more. Our authorization which was put in place in September of '24 was for 2 million shares. We've still got 1.75 million shares available under that authorization for repurchase.

Speaker #4: So, clearly, another tool in the toolkit. The dividend—we've got a good track record of a healthy dividend and an ability to increase it steadily as the business continues to grow and be profitable.

Speaker #2: I'll just add relative to geographic expansion. We're executing well there. You can see that in the rental momentum that we have. That's one of the drivers of that.

Phil Hawkins: I'll just add, relative to geographic expansion, we're executing well there. You can see that in the rental momentum that we have. That's one of the drivers of that. We do that primarily organically through CapEx, as Keith mentioned, but we are able to utilize smart M&A as an accelerator. The acquisition that we closed at the end of quarter is one example of that, where we expanded our reach into the Midwest with a small tuck-in modular acquisition. It provides us additional density, a facility that we can leverage to further scale in that part of the country.

Speaker #2: We do that primarily organically through capex, as Keith mentioned, but we are able to utilize smart M&A as an accelerator. And the acquisition that we closed at the beginning of the quarter is really an example of that, where we expanded our reach into the Midwest with a small tuck-in modular acquisition.

Speaker #2: So it provides us additional density, a facility that we can leverage to further scale in that part of the country. And we'll be able to add value to the existing customer base by providing multiple modular plus services that weren't being offered previously as well as expanding from that kind of commercial construction customer base to adding classrooms, portable storage, larger commercial complexes, product offerings that they didn't have in their toolkit.

Phil Hawkins: We'll be able to add value to the existing customer base by providing Modular+ services that weren't being offered previously, as well as expanding from that kind of commercial construction customer base to adding classrooms, portable storage, larger commercial complexes, product offerings that they didn't have in their toolkit. We have an active pipeline of those types and other types of opportunities, and we work that regularly, but we feel good about where we're at in that process.

Speaker #2: So we have an active pipeline of those types and other types of opportunities, and we work that regularly. But we feel good about where we're at in that process.

Speaker #5: Sounds good. Thank you both.

Scott Schneeberger: Sounds good. Thank you both.

Speaker #4: Thank you.

Keith Pratt: Thank you.

Speaker #2: Thanks, Scott.

Phil Hawkins: Thanks, Scott.

Speaker #3: I'll take our next question from Daniel Moore with CJS Securities. Your line is open.

Operator 4: Take our next question from Daniel Moore with CJS Securities. Your line is open.

Operator: Take our next question from Daniel Moore with CJS Securities. Your line is open.

Speaker #6: Thank you. Good afternoon, Phil, Keith, for all the color and taking questions. Wanted to just go back to EnviroPlex. Curious if any of those delayed sales have now been executed and your prior comments would imply based on what we've seen in H1 that H2, I think, would be up slightly year over year just curious of your expectations for sales kind of Q3 and then the remainder of the year there.

Daniel Moore: Thank you. Good afternoon, Phil, Keith, for all the color and taking questions. Wanted to just go back to Enviroplex. Curious if any of those delayed sales have now been executed. Your prior comments would imply, based on what we've seen in H1, that H2, I think, would be up slightly year-over-year. Just curious of your expectations for sales Q3 and then the remainder of the year there.

Speaker #4: Yeah, I would say, as I mentioned a moment ago, some of those delays—I think it's a matter of weeks, others a few months.

Keith Pratt: Yeah. I would say, as I mentioned a moment ago, some of those delays, I think it's a matter of weeks, others a few months. Those are, in the case of Enviroplex, those are all contracted projects. Usually when a customer has decided to do something on the construction side, they actually want to get it done as quickly as possible. We and our customers are very aligned. This particular year, I think we'll see for Enviroplex, just to make the math work that I outlined earlier, if they hit a revenue number somewhere in the neighborhood of mid-forties, they have a lot of business to get completed in H2. I don't want to really get into handicapping how much in Q3 versus Q4.

Speaker #4: But those are in the case of EnviroPlex, those are all contracted projects. And usually when a customer has decided to do something on the construction side, they actually want to get it done as quickly as possible.

Speaker #4: So we and our customers are very aligned. This particular year, I think we'll see for EnviroPlex, just to make the math work that I outlined earlier, if they hit a revenue number somewhere in the neighborhood of the mid-40s, they have a lot of business to get completed in the second half.

Speaker #4: I don't really want to get into handicapping how much will fall in Q3 versus Q4. Several of the things that were a little late to finish in the second quarter are simply a matter of moving from June to July.

Keith Pratt: Several of the things that were a little late to finish in Q2, it is a matter of moving from June to July. There's other projects will take a little longer to get completed. I would say Enviroplex is likely to have a very strong H2. Whether some of those projects are completed in Q3 versus Q4, I want to be a little careful about pinning us down on that, but most likely both quarters will show healthy Enviroplex sales.

Speaker #4: But there's other projects that will take a little longer to get completed. So I would say Enviroplex is likely to have a very strong second half.

Speaker #4: Whether some of those projects are completed in Q3 versus Q4, I want to be a little careful about pinning a stone on that, but most likely both quarters will show healthy Enviroplex sales.

Speaker #6: Very helpful. And then, I'm curious, just from a sort of—we've talked about large customers versus small and smaller geographies—but just looking from a geographic perspective, are there any regions that are either picking up faster or, conversely, slowing down a little bit? And maybe just a little bit more color about the success that you're having with your geographic or regional penetration strategy?

Daniel Moore: Very helpful. Curious, just from a we've talked about large customers versus smaller geographies, but just looking from a geographic perspective, any regions that are either picking up faster or conversely slowing down a little bit? Maybe just a little bit more color about the success that you're having with your geographic or regional penetration strategy.

Speaker #2: Yeah. I'll take that. Daniel, just where I'd start is obviously we have more strength where we're entering the market, new to the market, didn't have fleet.

Phil Hawkins: Yeah. I'll take that, Dan. Just where I'd start is obviously we have more strength where we're entering the market, new to the market, didn't have fleet. We're able to participate in all the opportunities there. We're not depending on market growth. We're able to grow, even though the overall construction market may be contracting a little bit from a square footage standpoint. Those geographies that we talked about where we're small and growing, Pacific Northwest, Midwest, Northeast, would be examples where there's relative strength for us, not an indication of whether those markets are performing better overall. The other dynamic you have is in our legacy markets, just where we've been longer, we have larger fleets.

Speaker #2: We're able to participate in all the opportunities there. We're not depending on market growth. We're able to grow even though the overall construction market may be contracting a little bit from a square footage standpoint.

Speaker #2: So those geographies that we've talked about where we're small and growing—Pacific Northwest, Midwest, and Northeast—would be examples where there's relative strength for us, not an indication of whether those markets are performing better overall.

Speaker #2: And then the other dynamic you have is in our legacy markets, just where we've been longer, we have larger fleets. And so those places, even though the markets may be as healthy, as the new geographic markets, we just have much more inventory to deploy.

Phil Hawkins: Those places, even though the markets may be as healthy as the new geographic markets, we just have much more inventory to deploy, and we're more impacted by the slowdown in those smaller local construction projects. There's no markets that I would call out where we're extremely strong in one region of the country versus another. The exception would be obviously wherever you see these large data centers, mega projects, those tend to be in the Midwest, South, but you see those all over the country. Where those are happening, there's obviously pockets of strength. In general, I wouldn't call anything out geographically unique beyond our own internal geographic expansion initiative.

Speaker #2: And we're more impacted by the slowdown in those smaller local construction projects. But there's no markets that I would call out where we're extremely strong in one region of country versus another, the exception that would be obviously wherever you see these large data centers, mega projects, those tend to be in the Midwest, South, but you see those all over the country.

Speaker #2: And so where those are happening, there's obviously pockets of strength. But in general, I wouldn't call anything out geographically unique beyond our own internal geographic expansion initiative.

Speaker #6: Really helpful. Maybe just one more. You touched on it in the prepared remarks, but could you give a little bit more color or an update on the traction you're seeing with both Mobile Modular Plus as well as site-related services?

Daniel Moore: Really helpful. Maybe just one more. You touched on it in the prepared remarks, but give a little bit more color or update on the traction you're seeing, both Mobile Modular Plus as well as site-related services. How do we think about kind of incremental growth you can generate from both of those relative to the market over the next two, three, five years?

Speaker #6: And how do we think about kind of incremental growth you can generate from both of those relative to the market over the next two, three, five years?

Speaker #2: I think we're happy with the penetration that we're getting there. We talked about the quarter-over-quarter growth rate, particularly in mobile modular plus, still being strong and our cumulative annual growth rates in both those initiatives continue to be in the community strong.

Phil Hawkins: I think we're happy with the penetration that we're getting there. We talked about the quarter-over-quarter growth rate, particularly in Mobile Modular Plus still being strong and our cumulative annual growth rates in both those initiatives continue to be strong. We feel good about our ability to continue to penetrate with the existing offerings. Increasing the amount of the current product offerings, furniture, holding tanks, those kinds of things. As the fleet churns, we have opportunity to sell in the new orders where the old fleet that's on rent didn't have that opportunity. One level is increased penetration. At the same time, we're adding services and offerings to that Mobile Modular Plus lineup that give us more ways to add value to the customer and increase revenue to the order.

Speaker #2: So we feel good about our ability to continue to penetrate with the existing offerings. So increasing the amount of the current product offerings, furniture, holding tanks, those kinds of things as the fleet churns.

Speaker #2: We have opportunity to sell in the new orders where the old fleet that's on rent didn't have that opportunity. So one level's increased penetration.

Speaker #2: At the same time, we're adding services and offerings to that Mobile Modular Plus lineup that give us more ways to add value to the customer and increase revenue to the order.

Speaker #2: So, more recently, you've seen things like cell phone service, janitorial services, air care, filter replacement-type programs that are adding those capabilities. So, we see lots of opportunities—still opportunity to move the needle on penetration, and still opportunity to move the needle on services that we're offering.

Phil Hawkins: More recently, you've seen things like cell phone service, janitorial services, air care, filter replacement type programs that are adding those capabilities. We see lots of opportunities. Still opportunity to move the needle on penetration and still opportunity to move the needle on services that we're offering. If you think back to Keith, a question Keith talked about just on the pricing churn over time. Think about that opportunity to add those services happening over a similar time frame, right? Multi-year as the fleet churns and things that have been out on rent for three, four, five years come back, and we're able to get those back out on rent with a new level of service offerings.

Speaker #2: And then, if you think back to Keith's question—Keith talked about just on the pricing churn over time—think about that opportunity to add those services happening over a similar timeframe, right?

Speaker #2: Multi-year, as the fleet churns and things that have been out on rent for three, four, five years come back, we're able to get those back out on rent with a new level of service offerings.

Speaker #6: All right. Appreciate the color again.

Daniel Moore: All right. Appreciate the color again.

Speaker #2: Thank you. Appreciate the questions.

Phil Hawkins: Thank you. Appreciate the questions.

Speaker #1: We'll take our next question from Stephen Ramsey with Thompson Research Group. Your line is open.

Operator 4: We'll take our next question from Steven Ramsey with Thompson Research Group. Your line is open.

Operator: We'll take our next question from Steven Ramsey with Thompson Research Group. Your line is open.

Speaker #7: Hi, good evening. I wanted to hear a bit more on modular shipments exceeding returns. Definitely good to see that. Maybe talk to how much of that is less units coming in versus more going out.

Steven Ramsey: Hi, good evening. Wanted to hear a bit more on modular shipments exceeding returns. Definitely good to see that. Talk to how much of that is less units coming in versus more going out. Do you feel like the returns headwind is behind you, or at least sloping in the right direction?

Speaker #7: Do you feel like the returns headwind is behind you or at least sloping in the right direction?

Speaker #2: Yeah, I don't think it takes both sides of the equation, right? The shipments need to be growing and returns decreasing. So, I think we've seen a little bit of both.

Phil Hawkins: Yeah, it takes both sides of the equation, right? The shipments need to be growing and returns degreasing. I think we've seen a little bit of both. Historically, we talked about, if you think back three-ish years ago, peak construction markets, kind of lines up with our average term. We feel like that shift is in the process of happening, and that last four months of consistently seeing shipments exceed returns is a nice indicator for us. Again, you can have a large return from a single customer that might throw that off in a month or a quarter. We do feel like kind of the worst is behind us in terms of the lower shipment levels combined with higher return levels, and that we've got a trend here that's going to give us some solid momentum going forward.

Speaker #2: Historically, we talked about, if you think back three-ish years ago, peak construction markets kind of line up with our average term. We feel like that shift is in the process of happening, and that last four months of consistently seeing shipments exceed returns is a nice indicator for us.

Speaker #2: So again, you can have a larger turn from a single customer that might throw that off in a month or a quarter. But we do feel like kind of the worst is behind us in terms of the lower shipment levels combined with higher return levels.

Speaker #2: And then we've got a trend here that's going to give us some solid momentum going forward.

Speaker #7: Okay, that's great. On PRS, I've been hearing about how good the results were. And utilization is hitting very high levels, and it looks like you're raising capex.

Steven Ramsey: Okay. That's great. On TRS, been talked about how good the results were and utilization hitting very high levels, and it looks like raising CapEx. Do you feel like the high utilization constrained the results that you potentially could have put up? This larger equipment base, is it contributing meaningfully in the H2, or is this something that it rolls in through the H2 and helps 2027?

Speaker #7: Do you feel like the high utilization constraint, the results that you potentially could have put up, and then this larger equipment base—is it contributing meaningfully?

Speaker #7: And the second half, or is this something that rolls in through the second half and helps 2027?

Speaker #2: Yeah, all good comments, Stephen. A couple of things. First of all, I don't think we were constrained in the second quarter. We've got a really good team.

Keith Pratt: All good comments, Steven. A couple of things. First of all, I don't think we were constrained in Q2. We've got a really good team. They're just very nimble in how they react to market opportunities. They've been doing a remarkable job here for many quarters of capitalizing on a healthy demand environment and at the same time managing the fleet assets very effectively from a return on capital point of view. That's the first comment I would make. Given the healthy demand, and Phil mentioned earlier, we think the outlook is positive for this business. We're happy to add more capital. It is also a business that when we see shifts in demand, and we had this two or three years ago when circumstances were very different, we had the ability to very thoughtfully reduce the size of the fleet and turn it into cash.

Speaker #2: They're just very nimble in how they react to market opportunities. They've been doing a remarkable job here for many quarters. Capitalizing on a healthy demand environment and at the same time, managing the fleet assets, very effectively from a return on capital point of view.

Speaker #2: So that's the first comment I would make. And given the healthy demand I still mentioned earlier, we think the outlook is positive for this business.

Speaker #2: We're happy to add more capital. It is also a business that, when we see shifts in demand—and we had this two or three years ago, when circumstances were very different—we had the ability to very thoughtfully reduce the size of the fleet and turn it into cash.

Speaker #2: And again, if you look at the history of the last 12 quarters, you can see this business has that ability to reduce fleet size and turn it into cash fairly quickly.

Keith Pratt: Again, if you look at the history of the last 12 quarters, you can see this business has that ability to reduce fleet size and turn it into cash fairly quickly, and we've done it before. Right now, we're at a very different part of the cycle. There's opportunity. We're managing the fleet extremely well from a utilization point of view, and we're absolutely at that level in many product categories where it makes sense to invest more capital and keep in pace with the good growth and demand. That should be a positive, certainly for the rest of the year and hopefully beyond. That's the way I'd talk about it. This is a high-velocity business, and we have the team and the systems to manage that business very effectively.

Speaker #2: And we've done it before. But right now, we're at a very different part of the cycle. There's opportunity. We're managing the fleet extremely well from a utilization point of view.

Speaker #2: And we're absolutely at that level in many product categories where it makes sense to invest more capital and keep pace with the good growth and demand.

Speaker #2: And that should be a positive, certainly for the rest of the year, and hopefully beyond. But that's the way I talk about it. This is a high-velocity business.

Speaker #2: And we have the team and the systems to manage that business very effectively.

Speaker #7: Okay. That's all great. And then one last one for me, sticking to TRS. Can you talk about pricing and how, if that's a positive, for 2026?

Steven Ramsey: Okay, that's all great. Then one last one from me, sticking to TRS. Can you talk about pricing and if that's a positive for 2026? Maybe just put into context the pricing environment of this good cycle versus prior good cycles.

Speaker #7: And maybe just put in the context the pricing environment of this good cycle versus prior good cycles.

Speaker #2: I'll take that one, Stephen. I think pricing in the TRS world is very disciplined. It's typically a pretty tight range around percent of list.

Phil Hawkins: I'll take that one, Steven. I think pricing in the TRS world is very disciplined. It's typically a pretty tight range around percent of list. The possible lift that can come is in a high-demand environment like this, where manufacturers are increasing list prices. That could give opportunities for a little bit of pricing improvement as the list price of equipment goes up. We compete on price. We have to be in the zone, but this is not as dynamic a pricing environment as you see in our other businesses. Keith, anything else you'd like to add there?

Speaker #2: The possible lift that can come is in a high-demand environment like this, where manufacturers are increasing list prices. That could give opportunities for a little bit of pricing improvement as the list price of equipment goes up.

Speaker #2: But we compete on price. We have to be in the zone. But this is not as dynamic a pricing environment as you see in our other businesses.

Speaker #2: Keith, anything else you'd like to add there?

Speaker #3: Yeah. I'll just point out, Stephen, you've probably seen we've got what we call the "rich factor." That's a defined term. We provide it across each of our rental segments.

Keith Pratt: I'll just point out, Steven, you've probably seen we've got what we call the rate factor. That's a defined term we provide across each of our rental segments. That rate factor was up nicely at TRS-RenTelco 4.52 compared to 4.22 a year ago. The primary reason for the increase is just the mix of business that we're doing. It's shifting a little bit more towards the communication side. Those communications products in general have a shorter useful life. When we look at the cash we have to receive, it's a higher amount of cash per month given our view that the equipment will have a shorter useful life compared to some of the general purpose products that we have. The headline I would give you is our metric looks better. It's largely mix driven.

Speaker #3: That rate factor was up nicely at TRS Rentelco 4.52 compared to 4.22 a year ago. However, the primary reason for the increase is just the mix of business that we're doing.

Speaker #3: Essentially, it's shifting a little bit more towards the communication side, those communications products in general, have a shorter useful life. So when we look at the cash, we have to receive, it's a higher amount of cash per month given our view that the equipment will have a shorter useful life compared to some of the general products general-purpose products that we have.

Speaker #3: So, the headline I would give you is our metric looks better. It's largely mix-driven. And as Phil said, the pricing is generally pretty disciplined and stable.

Keith Pratt: As Phil said, the pricing's generally pretty disciplined and stable.

Speaker #7: Excellent. Thank you both.

Steven Ramsey: Excellent. Thank you both.

Speaker #2: I see.

Keith Pratt: Thanks, Steve.

Speaker #1: Once again, if you do have a question, you may press star one on your telephone keypad at this time. We'll move next to Mark Riddick with Sadoti.

Operator 4: Once again, if you do have a question, you may press star one on your telephone keypad at this time. We'll move next to Marc Riddick with Sidoti. Your line is open.

Operator: Once again, if you do have a question, you may press star one on your telephone keypad at this time. We'll move next to Marc Riddick with Sidoti. Your line is open.

Speaker #1: Your line is open.

Speaker #5: Hi. Good evening.

Marc Riddick: Hi, good evening.

Speaker #2: Hey, Mark.

Keith Pratt: Hey, Marc.

Speaker #5: So Keith, I really appreciated the tail end of the commentary there around the mix. Because that sort of delves into sort of where I was going to initially go with one of my questions.

Marc Riddick: Keith, I really appreciated the tail end of the commentary there around the mix, because that sort of delves into where I was going to initially go with one of my questions. The TRS utilization commentary, it certainly seems to have indicated it was growing through the quarter sequentially, I guess, and monthly, what have you. Is there sort of a general thought as to comfort levels as to, and not necessarily a feeling, but maybe can you talk a little bit about comfort levels of utilization within TRS and then I have a follow-up?

Speaker #5: But the TRS utilization commentary—it certainly seemed to have indicated it was growing through the quarter, sequentially, I guess, and monthly, what have you.

Speaker #5: Is there sort of a general thought as to comfort levels as to not necessarily a feeling, but maybe sort of can you talk a little bit about comfort levels of utilization within TRS?

Speaker #5: And then I have a follow-up.

Speaker #2: Yeah. Again, we try to manage that very carefully, balancing having equipment available for customers for the next order versus high utilization and strong return on invested capital.

Keith Pratt: Yeah. Again, we try to manage that very carefully, balancing having equipment available for customers for the next order versus high utilization and strong return on invested capital. Those are things we're always calibrating in the business. I think we're comfortable where we are, but we're absolutely at that point where it makes sense to add more capital in certain product categories, where the demand is strong, and our view is that strength will continue for many months. That's where we're at. Again, we've got a good team. They look at it very closely. This business has a lot of SKUs, so there are a lot of different items that we hold in inventory, and we're constantly evaluating should we add to one SKU or should we sell off at another?

Speaker #2: Those are things we're always calibrating in the business. I think we're comfortable where we are, but we're absolutely at that point where it makes sense to add more capital in certain product categories where the demand is strong and our view is that strength will continue.

Speaker #2: For many months. So that's where we're at. And again, we've got a good team. They look at it very closely. This business has a lot of SKUs.

Speaker #2: There are a lot of different items that we hold in inventory, and we're constantly evaluating whether we should add to one SKU or sell off another.

Speaker #2: That's all part and parcel of being in this business, and our team does a really good job.

Keith Pratt: That's all part and parcel of being in this business, and our team does a really good job.

Speaker #5: Great. And then, I know there's been a lot of questions, and I really appreciate all the color that you've already provided. Maybe one of the things we didn't touch on is education.

Marc Riddick: Great. Then I know there's been a lot of questions, and I really appreciate all the color that you've already provided. Maybe one of the things we didn't touch much on is on education. Maybe you can sort of give us a bit of an update as to what you're seeing there as to activity levels and projects, maybe relative to historicals as well as how you're feeling about funding environments in key markets there.

Speaker #5: Maybe just so it gives a bit of an update as to what you're seeing there, in terms of activity levels and process—maybe relative to historicals, as well as how you're feeling about funding environments and key markets there.

Speaker #2: Thanks, Mark. I appreciate the question. The national level, education drivers, I would characterize as neutral. You've got decreasing public school enrollment that we've been talking about, being offset by increasing modernization opportunities and our geographic expansion efforts, right?

Keith Pratt: Thanks, Marc. Appreciate the question. At the national level, education drivers I would characterize as neutral. You've got decreasing public school enrollment that we've been talking about being offset by increasing modernization opportunities and our geographic expansion efforts. We're entering into new markets where we have classroom opportunities. When we look at 2026, our education bookings were not as strong as they were last year. We continue to view education as an attractive long-term vertical. We like our market position there. It just isn't likely to be the growth driver for us in the near term. That's all coming from the commercial side of the business, and that's more than offsetting what we're seeing on the education side.

Phil Hawkins: Thanks, Marc. Appreciate the question. At the national level, education drivers I would characterize as neutral. You've got decreasing public school enrollment that we've been talking about being offset by increasing modernization opportunities and our geographic expansion efforts. We're entering into new markets where we have classroom opportunities. When we look at 2026, our education bookings were not as strong as they were last year. We continue to view education as an attractive long-term vertical. We like our market position there. It just isn't likely to be the growth driver for us in the near term. That's all coming from the commercial side of the business, and that's more than offsetting what we're seeing on the education side.

Speaker #2: We're entering new markets where we have classroom opportunities. When we look at 2026, our education bookings were not as strong as they were last year, but we continue to view education as an attractive long-term vertical.

Speaker #2: We like our market position there. It just isn't likely to be the growth driver for us in the near term, right? That's all coming from the commercial side of the business, and that's more than offsetting what we're seeing on the education side.

Speaker #5: Okay, great. And then, I know you touched a little bit on this—the acquisition, the smaller acquisition earlier in the year. Maybe you can touch a bit on just your general views as to what you're seeing out there currently: valuation levels, and how the pipeline looks as far as levels of attractiveness at this point.

Marc Riddick: Okay, great. I know you touched a little bit on this as to the smaller acquisition earlier in the year. Maybe you could touch a bit on just general views as to maybe what you're seeing out there currently, valuation levels, and how the pipeline looks as far as levels of attractiveness at this point.

Speaker #2: I can take this. I think there's plenty of opportunities out there, but what we always talk about is the three things that need to align.

Keith Pratt: I can take this. I think there's plenty of opportunities out there. What we always talk about is the three things that need to align. You need a willing seller, you need high-quality assets and business, and you need the right valuation. The three of those things don't line up in our world incredibly often. You see that kind of in our history. We have an active pipeline of opportunities of all shapes and sizes that we're regularly working and meeting with. We believe we're a buyer of choice, an attractive acquirer. Again, you need all those three things to line up. We're not in a hurry. We're glad to grow organically, and proven we can do that in all of our markets. Where we find the right opportunity, it's a nice accelerator for us. Nothing's changed there. Good pipeline, good process.

Phil Hawkins: I can take this. I think there's plenty of opportunities out there. What we always talk about is the three things that need to align. You need a willing seller, you need high-quality assets and business, and you need the right valuation. The three of those things don't line up in our world incredibly often. You see that kind of in our history. We have an active pipeline of opportunities of all shapes and sizes that we're regularly working and meeting with. We believe we're a buyer of choice, an attractive acquirer. Again, you need all those three things to line up. We're not in a hurry. We're glad to grow organically, and proven we can do that in all of our markets. Where we find the right opportunity, it's a nice accelerator for us. Nothing's changed there. Good pipeline, good process.

Speaker #2: A willing seller, you need high-quality assets and business, and you need the right valuation. And those three things don't line up in our world incredibly often.

Speaker #2: And you see that kind of in our history. But we have an active pipeline—opportunities of all shapes and sizes that we're regularly working on, meeting with, and we believe we're a buyer of choice and an attractive acquirer.

Speaker #2: But again, you need all those three things to line up. We're not in a hurry. We're glad to grow organically and have proven we can do that in all of our markets and where we find the right opportunity.

Speaker #2: It's a nice accelerator for us. So nothing's changed there. Good pipeline, good process. We've got the right playbooks around that. But we're not dependent on it.

Keith Pratt: We've got the right playbooks around that. We're not dependent on it.

Speaker #5: Great. Thank you very much.

Marc Riddick: Great. Thank you very much.

Speaker #2: Thank you.

Keith Pratt: Thank you.

Speaker #1: There appear to be no other questions. This concludes the Q&A portion of today's call. I would now like to turn the floor over to Mr. Hawkins for closing remarks.

Operator 4: There appears to be no other questions. This concludes the Q&A portion of today's call. I would now like to turn the floor over to Mr. Hawkins for closing remarks.

Operator: There appears to be no other questions. This concludes the Q&A portion of today's call. I would now like to turn the floor over to Mr. Hawkins for closing remarks.

Speaker #2: 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 October.

Phil Hawkins: 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 October to review our Q3 results.

Speaker #2: To review our third-quarter results.

Operator 4: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

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

Q2 2026 McGrath RentCorp Earnings Call

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