McGrath Rentcorp (NASDAQ:MGRC) Q4 2019 Earnings Conference Call - Final Transcript

Feb 25, 2020 • 05:00 pm ET


McGrath Rentcorp (NASDAQ:MGRC) Q4 2019 Earnings Conference Call - Final Transcript


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Ladies and gentlemen, thank you for standing by. Welcome to the McGrath RentCorp Fourth Quarter 2019 Conference Call. [Operator Instructions] Later, we'll conduct a question-and-answer session. [Operator Instructions]

Before we begin, note that the matters 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 2020 total company 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. Expect 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 Form 10-Q for the quarter.

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.

Joseph F. Hanna

Thank you, Skyler. Good afternoon, and thank you for joining us on today's call. I will start the call with some overall comments on our fourth quarter and full-year 2019 performance, and then Keith will provide additional detail in his financial review and outlook comments.

Before launching into my comments on our performance, I should also highlight that we are very happy to announce today a 12% increase in the annual dividend, marking our 29th year of consecutive increases. We are especially pleased that the performance of the business has allowed us to return value to shareholders in this manner. McGrath RentCorp has the rare distinction of being one of 134 publicly listed companies, currently known as dividend champions. All of whom have increased dividends more than 25 consecutive years, which we look forward to continuing.

So now let's turn to our 2019 performance. We were pleased to deliver another year of profitable growth for our shareholders. Throughout the year we remain steadfast on our performance improvement focus and our teams executed very well. Company-wide full-year rental revenues increased 11% and operating income 20%, driven by strong performance from Mobile Modular, TRS-RenTelco and Enviroplex offsetting challenges at Adler Tank Rentals.

Specifically addressing fourth quarter performance, we increased company-wide rental revenues by 8% and operating income by 9%, compared to a strong 2018 fourth quarter. Mobile Modular and TRS-RenTelco were the primary drivers of the increases offset by declines at Adler. Our performance improvement efforts materialized in the numbers. We realized a company-wide full-year return on invested capital of 9.3%, a 13% increase from the prior year. Primary drivers of the increase were a focus on more profitable transactions with better pricing,