McGrath Rentp(US:MGRC)2021-10-29 02:40Financial Data and Key Metrics Changes - Total revenues increased by 11% to $173.3 million, primarily driven by improved rental operations [28] - Adjusted EBITDA rose by 5% to $66 million, with a consolidated adjusted EBITDA margin of 38% compared to 40% a year ago [29] - Average monthly rental rates increased by 7% year-over-year, reflecting stable pricing conditions [30] Business Line Data and Key Metrics Changes - Mobile Modular segment revenues increased by 16% to $110.4 million, with rental revenues up by $12.1 million [30] - TRS-RenTelco total revenues decreased by 2% to $35.1 million, but rental revenues increased by 6% [32] - Adler Tank Rentals total revenues increased by 16% to $22.3 million, with rental revenues up by 11% [34] Market Data and Key Metrics Changes - The average fleet utilization for the third quarter increased to 76.5% from 76.3% [31] - Average utilization for TRS-RenTelco was 66.9%, slightly down from 67.1% a year ago [33] - Adler's average utilization increased to 48.1% from 44.1% [35] Company Strategy and Development Direction - The company is focusing on geographic expansion and diversifying end markets through recent acquisitions [9] - There is a strategic shift towards larger modular projects that provide long-term rentals, emphasizing product quality and service [17] - The company is optimistic about the long-term growth potential in the modular construction market, which is expected to expand significantly [24] Management's Comments on Operating Environment and Future Outlook - Management noted that supply chain disruptions are causing project delays but emphasized a healthy pipeline of projects [55] - The company is tightening its full-year guidance due to ongoing supply chain issues and elevated material costs [41] - Management remains positive about the funding environment, citing increased availability due to national stimulus packages [69] Other Important Information - The company experienced a 36% year-over-year increase in site-related services revenue, reaching $7.5 million [22] - Selling and administrative expenses increased by 29% to $39.9 million, largely due to acquisitions [36] - The effective tax rate for the third quarter was 28.7%, up from 20.8% a year earlier [37] Q&A Session Summary Question: Update on Adler's segments and oil and gas - Management indicated that oil and gas now represents 6% of Adler's rental mix, up from 5% last year, with a 25% year-over-year increase in that segment [44][49] Question: Update on 5G transition - Management noted broad-based customer activity in 5G, particularly in labs, with good long-term prospects for the wired communications segment [50][51] Question: Supply chain delays impact - Management stated that customer supply chain issues are the more significant impact, causing project delays, while their own supply chain issues are less extensive [52][53] Question: Pricing dynamics and cost inflation - Management is being aggressive with pricing to cover cost inflation, with a 7% increase in rental rates [56][59] Question: Update on funding availability - Management reported unprecedented funding availability due to national stimulus packages, which indirectly benefits their business [68][69] Question: Integration of acquisitions - Management expressed satisfaction with the integration process of recent acquisitions, noting strong pipelines and minimal turnover [70][72]