[Management View]
McGrath RentCorp reported a 4% decline in total revenues to $256 million for Q3 2025, driven by an 18% drop in sales revenues despite a 4% increase in rental operations. The company highlighted a 2% rise in Mobile Modular rental revenues and robust TRS-RenTelco growth, with improvements in utilization and rental margins. Management revised full-year revenue and adjusted EBITDA guidance upward, citing a positive sales backlog and increased booked orders.

[Outlook]
The company increased its full-year revenue outlook to $935 million–$955 million and adjusted EBITDA to $350 million–$357 million. Management is optimistic about future growth, supported by recent infrastructure funding and a strong sales backlog. The company plans to continue expanding its modular and portable storage businesses and is actively pursuing acquisitions.

[Financial Performance]
Year-over-year, total revenues decreased by 4%, with rental operations up 4% and sales revenues down 18%. Adjusted EBITDA decreased by 7% to $96.5 million. Mobile Modular total revenues decreased by 5%, while TRS-RenTelco total revenues increased by 6%. Portable Storage rental revenues increased by 1% year-over-year.

[Q&A Highlights]
Question 1: Could you address the lumpiness of sales activity and the run rate in the business?
Answer: Sales activity was more balanced this year compared to last year. The sales backlog is strong, and projects that didn't close in Q3 will move to Q4. Management is confident in hitting sales targets and anticipates continued growth.

Question 2: How do you see the education sector and funding for the next year?
Answer: Q3 saw decent activity in education, with more shipments than last year. Funding is strong, with significant bonds passed in California and Texas, expected to benefit the company in 2026.

Question 3: Could you speak to the rate environment across modular and portable storage?
Answer: Rates are holding steady, with a positive differential between fleet average pricing and new contracts. Portable storage rates are stable, with some concessions on transportation costs to remain competitive.

Question 4: Are you moving into the seasonal retail space in storage?
Answer: Seasonal retail is not a strategic focus but provides opportunities. The company is well-positioned to pick up orders from large retailers when available.

Question 5: How is your visibility for TRS heading into next year?
Answer: Bookings and rental order volume are strong, with momentum expected to carry into next year. The company is managing inventory appropriately and sees no significant changes in the landscape.

Question 6: Could you elaborate on technology investments and expected returns?
Answer: Investments are focused on updating systems, moving to the cloud, and enhancing customer-facing technology. The company aims to keep systems relevant and customer-friendly.

Question 7: Can you speak to the cadence of inquiries and order rates for mobile modular and portable storage?
Answer: Quote volumes and booked orders are healthy, with double-digit growth in mobile modular. Portable storage shows consistent inquiry levels and order flow.

Question 8: Will the shift from CapEx to OpEx continue, and what would cause a shift back to CapEx?
Answer: The shift depends on fleet utilization. With available equipment, the company can meet demand without significant new CapEx. TRS may see selective capital spending due to good utilization.

Question 9: How does the current environment compare to last year, and do you expect normalized growth in EBITDA?
Answer: The environment remains mixed, with headwinds from high interest rates and policy uncertainty. The company is counterbalancing these with growth initiatives and regional expansion.

Question 10: How are the two small acquisitions progressing, and what does the pipeline look like?
Answer: The acquisitions are integrated and contributing, with no red flags. The pipeline is active and encouraging, supporting the growth strategy.

[Sentiment Analysis]
Analysts and management maintained a positive tone, focusing on growth opportunities and strategic initiatives. Management expressed confidence in meeting guidance and highlighted strong funding and sales backlogs as positive indicators.

[Quarterly Comparison]
| Metric | Q3 2025 | Q3 2024 |
|---------------------------------|---------|---------|
| Total Revenues | $256M | $267M |
| Adjusted EBITDA | $96.5M | $103.8M |
| Net Income | $42.3M | $45.9M |
| Diluted EPS | $1.72 | $1.87 |
| Mobile Modular Revenues | $181.5M | $191M |
| TRS-RenTelco Revenues | $36.9M | $34.8M |
| Portable Storage Revenues | $17.3M | $17.1M |

[Risks and Concerns]
The company faces risks from uncertain market conditions, high interest rates, and potential impacts from federal government shutdowns. The Architectural Billings Index remains soft, indicating challenges in nonresidential construction.

[Final Takeaway]
McGrath RentCorp demonstrated resilience in Q3 2025, with strong rental growth offsetting declines in sales revenues. The company is well-positioned for future growth, supported by a robust sales backlog, strategic acquisitions, and infrastructure funding. Management's focus on leveraging existing fleet and expanding into new markets is expected to drive long-term success, despite current market uncertainties.