McGrath RentCorp

Ladies and gentlemen, thank you for standing by. Welcome to the McGrath RentCorp Fourth Quarter 2025 Earnings Call. At this time, all conference participants will be available. 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, February 25, 2026. Before we begin, note that the matters that company management will be discussing today are not statements of historical facts or 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. and Keith Pratt, Chief Financial Officer. I will now turn the call over to Mr. Hanna. Go ahead, sir.

Thank you, Stephanie, and good afternoon, everyone. We appreciate you joining us for McGrath RentCorp's fourth quarter and full year 2025 earnings call. This is a particularly meaningful call for me personally. It will be my final earnings call as CEO of McGrath. As many of you saw in our February 5th press release, I will retire as CEO effective April 3rd, but remain a director on the McGrath board. I want to start by expressing my deep gratitude to our customers, our team members, our board, and our shareholders. It's been an honor to lead this organization. I'm very proud of our company culture, our reputation with customers, and the growth we have realized over the past nine years. Our board invested considerable time developing a thoughtful CEO succession plan and is confident that Phil Hawkins is the best leader to succeed me given his industry stature and experience at McGrath since 2004, most recently as Chief Operating Officer. Phil is a seasoned industry professional who embodies the core values of our company and his experienced execution Thank you for joining us today. including our financial outlook for 2026. And then we'll open the call for questions. I should also highlight that our board of directors today announced our company's quarterly cash dividend for the quarter ending March 31st, 2026. This will be McGrath's 35th consecutive annual dividend increase. Now for the fourth quarter 2025, Total company revenues rose 5%, driven by rental operations revenue growth across all three of our rental businesses. Adjusted EBITDA increased 14% from a year ago. I am pleased with its performance, which was driven by strong results at Mobile Modular and TRS Rentelco. Across the company, our rental businesses perform well in a mixed demand environment. At Mobile Modular, activity was steady, portable storage showed continued stabilization, and TRS maintained the healthy momentum we saw throughout the year. Looking first at our Mobile Modular business, rental revenues increased 2%. Our Mobile Modular Plus offerings and our geographic expansion efforts gave us opportunities to grow in a slow, non-residential construction market. We continue to benefit from the shift in demand towards megaprojects, which helped to offset lower demand across other non-residential construction categories. Sales of new modular units were down in the fourth quarter and for the full year as a challenging non-residential construction market presented fewer opportunities. In contrast, Our EnviroPlex business had a very strong fourth quarter and full year with healthy education demand, growing revenues with high gross margins. Turning to portable storage, we continue to realize gradual top line improvement. While broader commercial construction remains soft, we benefited from seasonal retail business and geographic expansion progress. In the quarter, Rental revenues increased 3% year over year. Finally, TRS Rentalco. Rental revenue grew by an impressive 13% in the fourth quarter. This business completed a notable year of recovery, ending with sustained utilization in the low to mid 60s and healthy demand across both general purpose and communication segments. As I reflect on 2025, Our company had a strong fourth quarter, which played an important role in delivering a solid full-year result in a mixed environment. Over the course of 2025, weakness in non-residential construction created headwinds for the company, but our strategic initiatives made a positive contribution and helped offset those pressures, as well as the performance at TRS and EnviroPlex. which bolstered our overall results. I want to thank each of our team members for your accomplishments and steadfast commitment to delivering the highest quality service to our customers. Our culture at McGrath is a driving force behind our growth and it shines through in every customer interaction. Phil, over to you to comment on our business outlook and our 2026 plans.

Thank you, Joe, and good afternoon, everyone. I appreciate the opportunity to join the call today and to share more perspective on the business. I'd like to start by saying McGrath has been my home for more than 20 years, and I've had the opportunity to work across nearly every part of the organization. I work closely with both Joe and Keith with a shared focus on disciplined execution and building long-term shareholder value. Joe leaves behind an impressive legacy of leadership, and service commitment that he has thoroughly ingrained throughout our company. It is a great honor to succeed Joe as CEO and to continue leading our capable team. As CEO, I look forward to building upon that foundation, continuing to strengthen our market positions and leading McGrath to capture long-term opportunities that lie ahead of us while delivering value for our shareholders. Now, let's look at the year ahead. The key drivers of our performance in 2026 will be continued progress from our modular growth initiatives and building on the market recovery at TRS. I'll discuss those further after I outline the overall demand environment for our businesses. In the modular business, uncertain market conditions persist. Non-residential construction indicators, such as the Architectural Billings Index, or ADI, remain soft. While we do not expect meaningful improvement in the environment this year, we have proven our ability to grow in these conditions. At Mobile Modular, we started 2026 with lower utilization, but with some solid momentum, driven by the ongoing success of our services and geographic expansion initiatives. In our commercial business, megaprojects such as large industrial projects, data centers, and government work remain active. Our fleet size and modification capabilities provide a competitive advantage in these opportunities, and these strengths are helping our pipeline and bookings. In education, we expect a stable market this year. Overall, our education markets and modernization back box are healthy. The modular business remains our largest long-term growth opportunity. Turning to portable storage, We remain hopeful that the market demand is stabilized. While industry utilization remains low, our order activity has shown some positive momentum, and we are starting 2026 with a slightly higher rental revenue run rate than at the beginning of 2025. At the same time, profitability remains a key challenge in this highly competitive market. We are laser-focused on improving sales effectiveness to get more units out on rent while protecting margin. We will continue to invest in growing our presence in existing markets, expanding into new locations aligned with demand, and pursuing tuck-in acquisitions that support our growth. TRS is entering 2026 with good momentum. We see continued strength in aerospace and defense, data centers, and semiconductor segments. Our 2026 performance will be accomplished through a strong leadership team, with deep technical expertise and the ability to deploy capital effectively. In summary, across the graph, we are entering 2026 in a healthy position. We are confident that our strategy is sound and we have the right team to execute. With that, I will turn the call over to Keith, who will take you through the financial details of our quarter and our outlook for 2026.