Yahoo Finance McGrath RentCorp (NASDAQ:MGRC) Q3 2023 Earnings Call Transcript
McGrath RentCorp (NASDAQ:MGRC) Q3 2023 Earnings Call Transcript October 26, 2023
McGrath RentCorp beats earnings expectations. Reported EPS is $1.49, expectations were $1.25.
Operator: Ladies and gentlemen, thank you for standing by. Welcome to the McGrath RentCorp Third Quarter 2023 Earnings Call. [Operator Instructions] This conference call is being recorded today, Thursday, October 26, 2023. 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 regarding our full year 2023 financial outlook as well as statements relating to the company’s expectations, strategies, prospects, 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. In addition to the press release issued today, the company also filed with the SEC the earnings release on Form 8-K and its Form 10-Q for the quarter ended September 30, 2023. Speaking today will be Joe Hanna, Chief Executive Officer; and Keith Pratt, Chief Financial Officer. I will now turn the call over to Mr. Hanna. Go ahead, sir.
Joe Hanna: Thank you, Travis. Good afternoon, everyone. Thank you for joining us on our call today. Our third quarter 2023 reported earnings reflect further progress with our strategic growth focus on the modular business. We delivered impressive results for a third consecutive quarter this year. Rental revenues increased 22%, total revenues increased 40% and adjusted EBITDA from continuing operations increased 47% in the third quarter. Once again, our teams executed very well. My sincere thank you to all our team members for your hard work and focus on what matters to our customers, our shareholders, and to each other with your incredible team coverage and delivery. As a reminder, on February 1 this year, we simultaneously acquired Vesta Modular and sold our Adler Tank business.
Since then, we have been focused on integrating Vesta into our Mobile Modular business. Progress on key integration milestones is on schedule. All aspects have gone extremely well. During the third quarter, we completed our organization work and associated changes and have now fully integrated the Vesta team into our McGrath operating structure. Our new team members are very capable and engaged in each of the key integration areas. We have been impressed with the number of ideas generated towards achieving our synergy targets. We have completed a bottom-up synergy analysis and feel confident in our ability to achieve our $8 million EBITDA synergy target. While still early, the cross-selling and geographic expansion opportunities we anticipated with the Vesta acquisition are being realized.
Across the country, both Mobile Modular and Vesta sales reps have won incremental orders by being able to access our broader combined fleet. Our combined sales teams are working well together to leverage relationships in national accounts to win orders. They have begun sharing contacts in key accounts where one party may have had a stronger presence, resulting in more one business and sturdier relationships. Shifting now to provide a few highlights specific to our modular business. We were very pleased with overall business performance in the quarter. Rental revenues grew 36% and reflected not only more units on rent, but also continued benefit of the pricing appreciation trends that we have been realizing in prior quarters. Keith will provide more details on these trends in his remarks.
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