McGrath RentCorp Q3 2024 Earnings Call Transcript

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Provided by Quartr
October 24, 2024

There are 5 speakers on the call.

Operator

This conference call is being recorded today, Thursday, October 24, 2024.

Operator

Before we begin, note that the matters that 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 ks and other SEC filings. Forward looking statements are made only as the date hereof. Except as otherwise required by law, we assume no obligation to update any forward looking statements.

Operator

In addition to the press release issued today, the company also filed with the SEC the earnings release on Form 8 ks and its Form 10 Q for the quarter ended September 30, 2024. Speaking today will be Joe Hanna, Chief Executive Officer and Keith Pratt, Chief Financial Officer. I will now turn the call over to Mr. Hanna. Please go ahead, sir.

Speaker 1

Thank you, Jess. Good afternoon, everyone, and thank you for joining us on our call today. It has been quite an eventful quarter. On September 18, we announced that we had mutually agreed to terminate our pending acquisition by WillScot. In accordance with the terms of the merger agreement, McGrath received a termination fee of $180,000,000 From the announcement of the merger in January 2024, we navigated a 9 month period where McGrath operated as a company anticipating being acquired.

Speaker 1

Needless to say, this stretch was an unfamiliar operating environment for our company. We maintained our independent competitive positioning in the marketplace throughout this period. My direction to our teams was very simple. First, stick to our strategy and execute as we have always done. 2nd, deliver our financial plan and keep the company healthy.

Speaker 1

Through the 9 month period across the company, we kept our teams together, found ways to reduce cost and to enhance revenue streams and supported one another throughout. I truly think it is a testament to our strong culture and the dedication and commitment of our team members to each other and to our customers that we lost very few people to turnover through this challenging period. I could not be prouder of everyone's accomplishments during such an uncertain time. With that, we are back to normal quarterly earnings reporting and discussion. So let's turn now to our latest results.

Speaker 2

For the

Speaker 1

Q3, total company revenues increased 10% and adjusted EBITDA increased 13%. The modular business performed very well, while our portable storage and TRS businesses experienced market demand headwinds during the quarter. Mobile modular had a strong quarter with rental revenues growing 9% and sales revenues growing 14%. Both our commercial business and our education rentals grew during the quarter. The commercial wins we experienced were geographically broad based and in a wide variety of market verticals, including government and technology.

Speaker 1

Our education business benefited from modernization and growth projects and encompass both public and private school customers. We maintained our focus on solid execution. Our team actively managed pricing, fleet utilization and deployment of new fleet. Consistent with recent ABI data and other macro indicators of construction related demand, we experienced some delays and softness in the demand environment. Utilization dipped slightly year over year and ended the quarter at 76.5%.

Speaker 1

We still consider this to be a healthy range. Based on quote volumes and bookings, we have opportunities to improve this number. In addition to our core rental revenue drivers, we also continued the expansion of our revenues in the services portion of our customer offerings. Revenues from Mobile Modular Plus, site related services and custom modular sales all grew in the quarter and we remain excited about the opportunities these additional services offer our customers. Turning to our portable storage business, rental revenues declined by 11% in the quarter from a year ago.

Speaker 1

Recent ABI data and other macro indicators of construction related activity reflect delays and softness in the demand environment. Less activity in commercial construction driven by interest rate headwinds appears to be a primary factor driving our portable storage decrease. Shipments for new projects were below expectations and returns were higher than planned as projects completed and were not replaced as quickly. The effect was widespread across our geographies and not concentrated in any one area. At TRS RenTelco, rental revenues declined by 10% with both our general purpose and communications rental revenues impacted.

Speaker 1

This reflected the continuing industry wide slowdown in test and measurement equipment markets both at OEM and rental equipment providers. We took appropriate measures in the quarter to continue to keep the business on a stable footing. We sold excess equipment and scaled back purchases of new equipment. Shifting gears beyond the 3rd quarter, I would like to take a moment now to comment about the Helene and Milton hurricanes. Our operations are secure and we are up and running in all locations with negligible disruption.

Speaker 1

Despite the extensive regional storm damage and heartbreaking photos and coverage of these natural disasters, events like this are typically not a big needle mover for McGrath. Near term, the storms in some cases could have a negative impact with delays to customer projects either in the field now or planned. Also, until recovery efforts reach further stages, we are not anticipating much in the way of new business opportunities for McGrath. Nevertheless, we are positioned to provide both space and storage for customers who need it. We will likely know more about any new storm related demand in the months ahead as recovery operations continue.

Speaker 1

Continuing to look ahead, for the Q4 and beyond 2020 4, there is clearly uncertainty in the overall demand environment. Soft demand that we have been experiencing in our portable storage and TRS businesses may continue into 2025. At Mobile Modular, our range of growth initiatives and positive pricing dynamics should remain positive and help to offset any market demand softness. With interest rates projected to ease in the quarters ahead, we are cautiously optimistic that demand conditions may improve, although that could take time and we will likely be well into 2025 before we see results. That said, long term, I could not be more positive about the prospects for our growth and continued execution of our strategy.

Speaker 1

Our efforts to grow our modular business, both organically and by strategic acquisitions, continue to produce encouraging results. With our broader geographic coverage from our new branch locations and acquisitions, we have plenty of opportunities to make further fleet investments to serve customers. We have runway to continue to grow for many years ahead. Our pricing disciplines and processes are robust and as the fleet turns over, we will have a revenue tailwind. The initiatives that we started, namely Mobile Modular Plus, site related services and custom modular sales are adding value for our customers and growing.

Speaker 1

We have a large, diverse and high quality customer base across commercial and education markets. Our commercial opportunities are broad and include mega projects, government infrastructure and data center growth. We believe our education business has a multiyear period of continuing school modernization needs, new construction to support shifting student populations and growth opportunities in private schools and charter schools, and we are well positioned to serve those customers across multiple geographies. Our portable storage business not only has markets we are in that we are early in their growth phase, but also many new markets for us to enter over time, representing future growth potential. Our TRS business is a leading technology provider with the ongoing demands for more bandwidth and faster speeds in devices we use every day.

Speaker 1

We see a positive path ahead for the business to recovery. In summary, we believe our multi year opportunity to bring additional value to our customers through expanded service offerings and are committed to continuing to increase our customer base and geographic coverage. We remain committed to building long term shareholder value through sound strategic focus, disciplined capital allocation and consistent execution. McGrath is on a strong footing as we emerge from the terminated merger agreement. Sometimes companies emerging from a terminated merger process are damaged.

Speaker 1

We are not. Fundamental to our success is a culture that I am genuinely honored to be a part of. Our team members care about our customers and each other unlike anything I've seen in my 34 years of business experience. Their will to serve and lean in was the driver of our success through an uncertain period. And I'm quite sure that coupled with our strategies and execution plans in place today, we have what it takes to move McGrath to another level of growth and performance.

Speaker 1

We will be focused on doing just that, benefiting our shareholders, customers, partners and team members along the way. I would like to once again thank our team members and leaders for the outstanding job each of you has already done this year. We are focused as a team on a solid finish to 2024. With that, I'd like to turn the call over to Keith, who will take you through the financial details of our quarter and our outlook for the full year.

Speaker 2

Thank you, Joe, and good afternoon, everyone. As Joe highlighted, we delivered very good results in the 3rd quarter, driven by the performance of our mobile modular business. Looking at the overall corporate results for the Q3, total revenues from continuing operations increased 10% to $267,000,000 and adjusted EBITDA increased 13% to $104,000,000 During the Q3, the company received a $180,000,000 payment from WillScot Mobile Mini attributed to the termination of the previously announced merger agreement. The transaction costs incurred during the quarter due to the now terminated merger process were 39,000,000 dollars The proceeds received partly offset by the transaction costs incurred and an increase in provision for income taxes resulted in a $104,000,000 net income contribution during the quarter or $4.21 per diluted share. Reviewing Mobile Modular's operating performance as compared to the Q3 of 2023, Mobile modular had an impressive quarter as we continue to make progress delivering on our mobile our modular business growth strategy.

Speaker 2

Adjusted EBITDA increased 23% to $71,400,000 and total revenues increased 13% to $191,400,000 There were increases across all operational revenue streams, including 9% higher rental revenues, 23% higher rental related services revenues and 14% higher sales revenues. These sales revenues increase was primarily due to higher new equipment sales and demonstrated good progress with our initiatives to grow modular sales projects. Rental margins were 62%, up from 59% a year ago, primarily because of the rental revenue growth and the lower inventory center costs. We continued our disciplined fleet management on a larger fleet with 5% higher average rental equipment on rent and average fleet utilization of 77.1% compared to 79.9 percent a year ago. 3rd quarter monthly revenue per unit on rent increased 18% year over year to $8.20 For new shipments over the last 12 months, the average monthly revenue per unit increased 16% to $11.91 Progress with Mobile Modular Plus is embedded in these data points and is an additional growth driver.

Speaker 2

We continue to make progress with our modular services offerings. For the Q3, mobile modular plus revenues increased to $7,900,000 from $7,600,000 a year earlier and site related services increased to $12,800,000 up from 10,100,000 dollars Turning to the review of Portable Storage. Adjusted EBITDA for Portable Storage was $10,800,000 a decrease of 10% compared to the prior year. Demand conditions during the quarter were weaker, primarily because of lower commercial construction project activity. Higher sales revenues partly offset rental weakness, resulting in a total revenue decrease of 11% to $23,100,000 Rental revenues for the quarter decreased 11% to $17,000,000 and rental margins were 86% compared to 84% a year ago.

Speaker 2

Average rental equipment on rent decreased 12%, while average utilization for the quarter was 62.8% compared to 76.5 percent a year ago. We responded to the softer market demand conditions by reducing new equipment capital spending and carefully managing operating costs. Turning now to the review of TRS RenTelco, adjusted EBITDA was $18,900,000 a decrease of 10% compared to last year and total revenues decreased 11% to $34,800,000 Rental revenues for the quarter decreased 10% as the industry experienced continued end market weakness. Average utilization for the quarter was 57.3% compared to 59.4% a year ago and rental margins were 37% compared to 40% a year ago. Sales revenues decreased 13% to $7,600,000 and gross margins were 52% compared to 35% a year ago.

Speaker 2

To address the softer business conditions, we continue to reduce new equipment capital spending, focused on sales of used equipment, reduced fleet size and carefully managed operating costs. Total fleet value based on original cost of equipment was $357,000,000 at the end of September, down $11,000,000 from the Q2 and down $26,000,000 from a year ago. The remainder of my comments will be on a total company basis from continuing operations. 3rd quarter selling and administrative expenses increased $800,000 to $49,300,000 During the quarter, the company determined that transaction costs totaling $39,000,000 attributed to the terminated merger agreement were non operating and therefore were excluded from selling and administrative expenses. Interest expense was $12,600,000 an increase of $1,600,000 as the result of higher average interest rates and higher average debt levels during the quarter.

Speaker 2

The 3rd quarter provision for income taxes was based on an effective tax rate of 26.4% compared to 27.3% a year earlier. The decrease was primarily due to changes in business mix by state. Turning to our year to date cash flow highlights. Net cash provided by operating activities was $338,000,000 compared to $119,000,000 in the prior year. The increase was primarily attributed to the $180,000,000 payment received from WillScot Mobile Mini, net of $61,000,000 transaction costs.

Speaker 2

Rental equipment purchases were $167,000,000 dollars compared to $171,000,000 in the prior year. New equipment purchases were primarily for the modular business as we reduced spending at TRS and portable storage in response to softer demand conditions. In addition to investments in new fleet, healthy cash generation allowed us to pay $35,000,000 in shareholder dividends. At quarter end, we had net borrowings of $609,000,000 and the ratio of funded debts to the last 12 months adjusted EBITDA was 1.75:one. Finally, our 2024 financial outlook.

Speaker 2

For the full year, we currently expect results from continuing operations to revenue between $910,000,000 $920,000,000 adjusted EBITDA between $345,000,000 $351,000,000 gross rental equipment capital expenditures between $180,000,000 $190,000,000 Our outlook reflects the following expectations for the final quarter of the year. Modular rental revenues up slightly from the Q3. Modular rental related services revenues at a level comparable to the 2nd quarter. We expect fewer site related services projects in the Q4 compared to the seasonally busier Q3. Modular sales revenues down slightly from the 3rd quarter.

Speaker 2

Overall performance at TRS and Portable Storage below 3rd quarter levels, reflecting demand market softness and seasonality. Total McGrath selling and administrative expenses, excluding expenses related to the merger transaction, up sequentially from the 3rd quarter. Interest expense of approximately $10,500,000 to $11,000,000 In summary, McGrath is on a solid financial footing. We remain committed to building long term shareholder value through sound strategic focus, disciplined capital allocation and consistent execution. Despite distractions from the merger process and challenging end market demand conditions for 2 of our businesses, we have delivered strong year to date results and we are fully focused on solid execution for the remainder of the year.

Speaker 2

That concludes our prepared remarks. Jess, you may now open the lines for questions.

Operator

Thank you. We'll go first to Scott Schneeberger with Oppenheimer. Your line is open. Please go ahead.

Speaker 3

Thank you. Good afternoon, Joe and Keith. A few questions. I'm going to start in Mobile Modular. With the end markets, commercial and education, you mentioned both are up in rental and it sounds good.

Speaker 3

Could you give us a sense of the magnitude? I would imagine education is a good bit stronger, but can you give us a sense of the magnitude of how much each of them is up? Thanks.

Speaker 1

Sure. Scott, actually it was pretty balanced for the quarter. There was not a big divergence there as far as how those both those segments performed. I think education was up 10% and commercial was up 8% for the quarter. So pretty balanced.

Speaker 3

Great. Thanks. And could we speak to price versus volume with regard to that? It looks when we saw the charts in the deck that you're still getting very strong pricing. I guess, so there's 2 questions in this.

Speaker 3

1, do you anticipate strong pricing to continue into next year? It sounds like the demand environment is solid. And then how was the price volume split? Thanks.

Speaker 1

Yes, I would say I'll answer the first part and Keith can follow-up. I would say we are we have a nice tailwind there. Our pricing efforts have paid off for us and we anticipate that same dynamic will go into next year.

Speaker 2

Yes. Scott, just in terms of price volume, pricing overall remains healthy. We've also been working hard, as you know, to add in additional services to contract. So that helps with the statistics on revenue per unit on rent. So we're making progress there.

Speaker 2

You'll see in some of our published statistics that the value of equipment on rent increased for the Q3 compared to a year earlier. It was up about 5%. Having said that, there is a dynamic as we churn the fleet and we introduce newer assets that are more expensive. Units on rent were actually done slightly year over year. So there's a lot of moving parts there, a lot of mix issues as well, but those are some of the dynamics that we saw in the Q3.

Speaker 3

Thanks, Keith. And just following on that and then we'll move to another segment. But the how was your quoting activity and your deliveries there? I realized this time of year for classrooms, it's probably quiet until you get to the Q1 and also for commercial modulars. But what type of trends are you seeing there maybe on a year over year basis or however you care to comment?

Speaker 3

Thanks.

Speaker 1

Yes, Scott, actually, quote volumes and opportunities resulting from those quotes were up very nicely in the quarter. I'm talking some of that was influenced by the addition of Vesta, but we're in the double digit range very easily there. And so we were very encouraged and that has remained strong virtually the entire year so far.

Speaker 3

Great. Thanks, Joe. Appreciate that. Over in portable storage, obviously a little bit more cyclically pressured. Could you answer the same question please, either one of you on the quoting and deliveries?

Speaker 3

And specifically, I kind of missed it, Keith. You said something about Q4 just now in the guide, portable 4th quarter versus Q3, is it expected to be down despite seasonal? I know you don't do a lot of seasonal relative to maybe some others in the industry, but if you could just speak to that trend? Thanks.

Speaker 2

Yes. Just to start with your last comment, Scott. Yes. If you plot a chart and just look at the rental revenues at Portable Storage this year, they've actually gone down as we went Q1 to Q2 to Q3. It's disappointing.

Speaker 2

It reflects the very difficult demand conditions we've seen there. And at this point, we don't see any change around those demand pressures. So we think the 4th quarter most likely will see rental revenues lower than the Q3 and therefore overall performance of that part of the business we would expect to be lower than Q3. So that's sort of the first comment. Without necessarily going into all the percentage detail, if you look at the drop in rental revenues in Q3, we saw similarly a reduction in quote opportunities, reductions in bookings, reductions in shipments, all the metrics were consistent with a difficult demand environment and similar to some of the comments we made, I think at the end of Q2.

Speaker 2

So, difficult conditions and definitely what we experienced.

Speaker 3

Thanks. Keith, just one more in that segment. Given everything you just said, how's the pricing environment? Just any elaboration on that topic? Thank you.

Speaker 1

Yes. Pricing, as we've had to reduce slightly, but we've really worked to hold our pricing as much as possible. And so, I haven't we haven't seen a significant deterioration there, Scott.

Speaker 3

Thanks, Joe. And then in TRS, kind of I guess, Joe, for you, the standard question, one, if you could speak to what you're seeing with regard to semiconductors and 5 gs? And then the last question on this segment would be, this has been a pretty prolonged cyclical downturn. Could you speak to the duration of past downturns and how you compare contrast it if possible? Thanks.

Speaker 1

Sure. As we reported earlier in the year, the weakness that we had first seen in the business was with semiconductor, computer and semiconductor part of the business, but that has actually spread a bit. It is now we're seeing slowness in the wireless part of the business and that's mostly tower work and things like that that the and that's mostly tower work and things like that that the service providers are doing out on-site and we're just seeing less of that than we had anticipated. Wired communications on the other hand, which is supporting all of the bandwidth requirements for data centers and things like that has actually been very strong. So we're seeing 2 different kind of mixes in that business.

Speaker 1

To address your question about longevity, this has been a longer downturn than typically we've seen. And so, we'd like it to turn. We think it will turn. One of the things notable in the business that I think is worthy of mentioning is that from a sequential quarter over quarter basis, the business has been performing in a very narrow band. So we really haven't seen a deterioration there as the year progresses.

Speaker 1

So I have to hope that we're in a kind of a situation right now where things have leveled out and that we have upside ahead of us.

Speaker 3

Thanks. And then last one for me is just on the $180,000,000 cash inflow. Keith, you quantified it on the call as post your legal and other expenses and post taxes, I think it was $104,000,000 left over. How is that going to be applied across the business?

Speaker 2

Sure, Scott. And I just want to expand upon your comment. You're absolutely right with what was said regarding the Q3 results and the contribution that we got related to the $180,000,000 reverse termination fee. But if you look at it more broadly and go back all the way to the Q4 when we began to incur transaction related expenses, you may recall we disclosed approximately $2,000,000 of expense back in that quarter and then we had additional expenses in the 1st and second quarter of this year. Really the entire journey of the transaction process caused us to incur $63,000,000 in expenses.

Speaker 2

And if you take that number against the $180,000,000 dollars and then apply a tax rate to the sort of gain that we had, really the net proceeds to McGrath are much closer to $86,000,000 So that's the first comment. Everything you said was right about the Q3. I like to look at it in terms of the overall economic impact on the graph when we look at the full journey that we've been on with the terminated transaction. In terms of what we do with the money, a couple of comments. I think the first thing to keep in mind is we just got the funds slightly over a month ago and we're assessing our options.

Speaker 2

If we look at the business, really it gives us a little bit more flexibility in terms of our capital allocation choices. We routinely look across the business and look at all the normal areas for capital allocation. We start with organic investment in the business. We look at our M and A opportunities in the landscape that can complement what we're doing organically. Obviously, we have a long track record with our shareholder dividends and increasing those dividends.

Speaker 2

And then periodically, we will look to repurchase our shares. So any excess capital in the near term that is not immediately allocated to one of those areas is used to pay down debt and that's what we did at the end of Q3. But we'll be looking at those normal areas of capital allocation as we go forward and we will try to make wise choices that benefit the shareholder over the long term.

Speaker 3

Great. Thanks, Geeta. And I appreciate your clarifying that over the life of the endeavor with WillScot now complete. So just a final question on that. Are all the costs that you anticipate to incur related to that done as of Q3 or might there be some trickle into the Q4 and was that counted in your $86,000,000 net?

Speaker 3

Thanks.

Speaker 2

Yes. Substantially all the costs we believe have been incurred at this point.

Speaker 3

All right. Great. Thanks for filling all my questions. I'll turn it over.

Operator

We'll move next to Marc Riddick with Sidoti.

Speaker 2

Hey, good afternoon.

Speaker 1

Hi, Marc.

Speaker 2

Hi, Marc.

Speaker 4

So I just wanted to follow-up on the and I appreciate all the commentary you've already provided. Wanted to talk a little bit about the debt reduction that did take place. I wonder if you could sort of give us a little additional commentary around the magnitude and what was taken, I guess, at the very end of the quarter? Or how should we think about the debt reduction from the end of 2Q to 3Q and maybe the timing and what was that there?

Speaker 2

Yes. So we announced the termination of the merger process on September 18. We promptly received the funds per the merger agreement from WillScot and that really came in just a few days after the announcement. And as I mentioned, we used the net proceeds to pay down debt in the Q3 and that is reflected on the balance sheet. So if you look at where we are at the end of the Q3, that's really net of all of that activity.

Speaker 2

The only item, if you look into the details is that we will have some higher cash taxes, in the Q4. There'll be a few tens of millions there. But the Q4 is also a quarter where typically we have much lower rental CapEx expenditure and generally higher cash flows. So if you want to sort of look ahead and look at debt levels for the Q4 year end, I would say they're going to be comparable to what we saw at the end of Q3.

Speaker 4

Okay. And that sort of then brings me to the so just general long term thought process, maybe a reiteration of maybe how you guys have looked at leverage and comfort levels of ranges and things of that nature. How should we be thinking about things going forward? And then maybe you could talk a little bit about the potential of ramping up of acquisition pipeline, which was sort of you guys have been on the sidelines on that during this process. So wondering if you could talk a little bit about those opportunities maybe and the opportunity to start doing that again?

Speaker 2

Sure. And I'll let Joe comment maybe on the broader how we think about M and A work. But just in terms of leverage, we ended the quarter at 1.75. Keep in mind with our loan agreements, we have a cap of 2.75. So from a leverage point of view, we're extremely comfortable.

Speaker 2

We're very comfortable running the business in the 2s. And again, we look at that as we look at strategic opportunities and capital allocation. It's just one of the factors we weigh as to when we pull the trigger on M and A or any other big initiatives that are more sporadic in nature. But very comfortable with leverage at the end of Q3. It really speaks to the fact the company is on a very solid financial footing as we exit this process that we've been through.

Speaker 1

Yes. Mark, I can kind of comment on our M and A strategy. We're in the process of updating our priorities there. However, as in the past, our portable storage and modular business will be the focus area for us if we do any M and A. We view that as a continuing viable option for us to either grow in areas that we are not perhaps a newer footprint and could use an acquisition to help build out that area.

Speaker 1

But we will follow the same guidelines that we have followed in the past. We get look for good quality businesses at fair prices and that's exactly what our strategy would be moving forward.

Speaker 4

Excellent. Thank you. And then I was wondering if you could talk a little bit about having gone through this process and I appreciate your commentary around the strength and the culture and everything that your employees were able to sort of shoulder through this process. I was wondering if you could talk a little bit about maybe sort of what you're looking at as far as internal hiring needs or any areas that you might want to be sort of relooking at or if there are any places that maybe you may not have been active in during the course of the year that you'd like to sort of pick up as far as internal investment wise, whether it's technology spend or anything like that? Are there any sort of areas that we should be thinking about going forward?

Speaker 4

Sure.

Speaker 1

There are some positions that we had put on delay essentially because of the merger agreement and we're going to start hiring those. And that really varies across the business, some sales positions, some operational positions that we'll staff for. But nothing we haven't had a significant decrease at all in turnover or in the number of folks that we had lost during the process. And so we're it's not like we're operating from a deficit there. And so I think in terms of other investments that we make, we perhaps delayed some investments in real estate.

Speaker 1

We put some IT initiatives on a slower path. And we'll get those projects going again, but nothing significant to report at this time.

Speaker 2

Okay. Excellent. Thank you. And Mark, just to help you with one of the comments that I made in the prepared remarks regarding SG and A being higher in the Q4 than the Q3 of this year. If you just think of things like hiring, it's a lot more difficult to make hiring or actually achieve hiring in a period where there's a pending acquisition.

Speaker 2

So if you think of where we were in January, we had a few positions we would have liked to hire over the course of the year to support business growth. And in addition, like in any normal year, we have some turnover. If you look at the net effect of that, we're running with open positions in the organization that we're not very actively filling. And it's not easier to fill them because we're clearly an independent company and we're charting our future here. So there's been a little bit of pent up demand to do that and that will be reflected on the expense side with some increase in that area, all normal for running the business.

Speaker 2

Excellent. Thank you very much.

Speaker 1

Thanks, Mark.

Operator

Ladies and gentlemen, that appears to be the last question. Now let me turn the call back over to Mr. Hanna for any closing remarks.

Speaker 1

I'd like to thank everyone for joining us on the call today and for your continuing interest in our company. We look forward to speaking with you again in late February to review our Q4 results.

Operator

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

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Earnings Conference Call
McGrath RentCorp Q3 2024
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