McGrath RentCorp (MGRC) 2010 Q1 法說會逐字稿

Welcome to the McGrath Rentcorp first quarter 2010 conference call. At this time all conference participants are in a listen-only mode. Later we will conduct a question and answer session. (Operator Instructions). This conference is being recorded today, Thursday, May 6, 2010.

I would now like to turn the conference over to Geoffrey Buscher of SBG Investor Relations. Please go ahead.

Thank you, operator. Good afternoon. I'm the investor relations advisor of McGrath Rentcorp and will be acting as moderator of the conference call today.

I would like to start by offering our apologies to anyone who had trouble getting on to the call. We are using a new conference call vendor and understand there were some glitches, and again we offer our apologies and will do our best to be sure it doesn't happen again.

Representatives on the call today from McGrath Rentcorp are Dennis Kakures, President and CEO, and Keith Pratt, Senior Vice President and CFO. Please note that this call is being recorded and will be available for telephone replay for up to 48 hours following the call by dialing 1-888-286-8010 for domestic callers and 1-617-801-6888 for international callers. The pass code for the call replay is 84608475.

This call is also being broadcast live via the internet and will be available for replay. We encourage you to visit the investor relations section of the Company's website at mgrc.com.

Our press release was sent out at approximately 4.05 p.m. Eastern Time, or 1.05 p.m. Pacific Time today. If you did not receive a copy but would like one, it is available online in the investor relations section of our website, or you may call 1-206-652-9704 and one will be sent to you.

Before getting started, let me remind everyone that the matters we will be discussing today that are not truly historical are forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934, including statements regarding McGrath Rentcorp's expectations, beliefs, intentions, or strategies regarding the future. All forward-looking statements are based upon information currently available to McGrath Rentcorp, and McGrath Rentcorp assumes no obligation to update any such forward-looking statements.

Forward-looking statements involve risks and uncertainties, which could cause actual results to differ materially from those projected. These and other risks related to McGrath Rentcorp's business are set forth in the documents filed by McGrath Rentcorp with the Securities and Exchange Commission, including the Company's most recent Form 10-K and Form 10-Q.

I would now like to turn the call over to Keith Pratt.

Thank you, Geoffrey. In addition to the press release issued today, the Company also filed with the SEC the earnings release on Form 8-K and its first quarter 2010 Form 10-Q.

For the first quarter 2010, total revenues decreased 8% to $61.7 million from $67.2 million for the same period in 2009. Net income decreased 16% to $6.6 million or $0.28 per diluted share from $7.9 million or $0.33 per diluted share for the same period in 2009.

Reviewing the first quarter results for the Company's mobile modular division compared to the first quarter of 2009, total revenues decreased $8.2 million or 23% to $27.5 million due to lower rental, rental-related services, and sales revenues during the quarter.

Gross profit on rents decreased $4.3 million or 26% to $12.1 million, primarily due to 17% lower rental revenues with rental margins decreasing to 59% from 66%. Lower rental margins were a result of lower rental revenues combined with flat depreciation and flat other direct costs. Selling and administrative expenses decreased 8% to $6.6 million.

Lower gross profit on rental revenues, rental-related services, and sales, partly offset by lower selling and administrative expenses, resulted in a decrease in operating income of $4.6 million or 38% to $7.5 million.

Finally, average modular rental equipment for the quarter was $487 million, an increase of $9 million. Average utilization for the first quarter decreased from 78.3% in 2009 to 68% in 2010.

Turning to first quarter results for the Company's TRS-RenTelco division compared to the first quarter of 2009, first quarter total revenues decreased $1.1 million or 4% to $24.3 million due to lower rental revenues. Gross profit on rents increased $0.5 million or 9% to $6.4 million. Rental revenues decreased $1 million or 5% and rental margins increased from 30% to 34% as depreciation as a percentage of rents decreased to 50% from 55%.

Selling and administrative expenses decreased $0.4 million or 7% to $5.4 million. As a result, operating income increased $1.3 million or 62% to $3.3 million. Finally, average electronics rental equipment at original cost for the quarter was $239 million, a decrease of $14 million. Average utilization for the first quarter increased from 61.4% in 2009 to 64.6% in 2010.

Turning next to first quarter results for the Company's Adler Tanks division compared to the first quarter of 2009, first quarter total revenues increased $2.2 million or 41% to $7.7 million, primarily due to higher rental revenues. Gross profit on rents increased $1.1 million or 39% to $3.9 million. Rental revenues increased $2 million or 50%, and rental margins decreased to 65% from 71%.

Selling and administrative expenses increased 44% to $2.7 million. As a result, operating income increased $0.2 million or 11% to $1.6 million. Finally, average rental equipment at original cost for the quarter was $80 million, an increase of $32 million. Average utilization for the first quarter decreased from 64.5% in 2009 to 64.1% in 2010.

On a consolidated basis, interest expense for the first quarter 2010 decreased $0.4 million to $1.5 million from the same period in 2009 as a result of the Company's lower average interest rates and lower average debt levels. The first quarter provision for income taxes was based on an effective tax rate of 38.8% compared to 39.1% in the first quarter of 2009.

Next I'd like to review our 2010 cash flows. For the three months ended March 31, 2010, highlights in our cash flows included net cash provided by operating activities was $28.6 million, a decrease of $3.3 million or 11% compared to 2009. The decrease was primarily attributable to a lower decrease in accounts receivable and other balance sheet changes together with lower operating results.

We invested $25.1 million for rental equipment purchases compared to $20.4 million for the same period in 2009 partly offset by $5.2 million in proceeds from used equipment sales in 2010. Dividend payments to shareholders were $5.2 million. Net borrowings decreased $5.3 million from $247.3 million at the end of 2009 to $242 million at the end of the first quarter 2010.

With total debt at quarter end of $242 million, the Company had capacity to borrow an additional $137 million under its lines of credit. And the ratio of funded debt to the last 12 months actual adjusted EBITDA was 1.94 to 1. We continue to have a solid low leverage balance sheet.

For 2010, first quarter adjusted EBITDA decreased $3.3 million or 10% to $28.6 million compared to $32 million in 2009 with consolidated adjusted EBITDA margin at 46% compared to 48% in 2009. Our definition of adjusted EBITDA and a reconciliation of adjusted EBITDA to net income are included in our press release and Form 10-Q for the quarter.

Turning next to 2010 earnings guidance, at this time based on first quarter 2010 results and our outlook for the remainder of the year, we are reconfirming our full year earnings per share guidance to be in a range of $1.30 to $1.45 per diluted share.

At this point I would like to turn the call over to Dennis.

Thank you, Keith. Let's go right to our results for our modular rental business. Mobile Modular's rental revenues for the quarter decreased by $4.3 million or 17% from a year ago to $20.6 million. Sequentially from the fourth quarter 2009, rental revenues were down approximately 4%. During the first quarter, our modular rental business continued to face challenges, particularly in the California market related to an unsettled fiscal landscape and high unemployment.

However, during the first four months of 2010 there were some important developments in our modular business that we believe will support higher rental revenue levels moving forward. First, in March, the state of California sold approximately $6 billion in bonds to support state infrastructure and educational facility projects. We're hopeful that as a result of these bond sales we will see a greater number of school modernization projects going forward.

Second, we are continuing to see an increase in larger commercial construction project opportunities in California, primarily associated with state infrastructure development and public works projects. These projects are for waterway, public transit, healthcare, roadway, and other public infrastructure improvement. What's especially favorable about these projects is that they are typically for larger square footage modular buildings and tend to be for multiyear rental terms. We will benefit from the income streams from these larger projects in the quarters ahead. Lastly, rental-booking levels for the first four months of 2010 were higher by approximately 25% compared to the same period in 2009 in the California market.

Moving to our Texas modular operations, we are seeing modestly improving education and commercial business activity levels thus far in 2010. As the price of oil has risen and the economy is improved, we are seeing more business activity with refineries in the petrochemical industry. And as the Texas student population continues to grow at 70,000 plus pupils annually, we are seeing more pressure on school districts and their facilities' needs.

In Florida we are seeing some lift in educational rental booking levels during 2010 as compared to 2009. We are anticipating November 2010 Constitutional Amendment Ballot measure on class-size reduction and potentially increasing the original law's required student-teacher ratios. 60% voter approval is required for passage. Ideally we would like to see the law's original student-teacher ratio requirements met at the individual classroom level, which have yet to be implemented by districts versus at the school average classroom level, as is being proposed in the ballot measure.

However, we believe we will still benefit if the amendment passes. This is due to some school districts having chosen not to move forward with meeting the school average classroom student-teacher ratios until a determination was made on potential student-teacher ratio changes from the original legislation.

Moving to our commercial modular business in Florida, we continue to face the challenges of lower business activity levels in a highly-priced competitive environment. We are hopeful for improved market conditions and higher business activity levels as the Florida economy recovers going forward.

As a result of the continuing challenges we faced across our modular rental division during the quarter, period-end utilization fell to 67.6% compared to 69% at the end of the fourth quarter 2009. We are hopeful that further downward pressure on utilization is limited.

It's important to keep in mind that our modular rental business results tend to behave differently than other types of businesses during an economic recession and recovery. During the downturn, due to the large installed base of rental contracts, the orderly return of equipment over time as customer's needs are fulfilled tends to lower rental revenues gradually. The same dynamic applies during a recovery in that new rentals coming in online add to the lower installed base of rental contracts and builds over time. In other words, there are typically not dramatic swings down or up with rental revenue levels in the near term.

As 2010 progresses, we are optimistic that we will see higher business activity levels and improving market conditions for our modular division. However, we expect it to remain a very price-competitive environment in all of the markets in which we operate until utilization levels begin to rise. We are also aware that although a higher percentage of our modular business is generated outside of California today than at any time in our history, improvement in our division-wide financial performance is chiefly dependent on the health of and our success in the California market.

Although California has not solved its budget challenges at the state level and unemployment remains high, there are several more positive signs today than just a few months ago that point to likely improvement in our results going forward.

Now let me turn our attention to TRS-RenTelco and their results. TRS-RenTelco's income from operations increased by 62% to $3.3 million quarter-over-quarter. These results were driven primarily from 13% lower depreciation expense, and secondarily from various SG&A cost reductions and improved gross profit on sales of equipment.

Although our rental revenue top line was down 5% quarter-over-quarter, rental business activity levels in bookings increased significantly during the latter part of the first quarter and are continuing. This new business activity is much stronger than a year ago and is being driven by a variety of electronics in-markets, including semiconductors and aerospace and defense.

We've done a good job at taking cost out of the business by selling under-utilized equipment and lowering depreciation expense as well as having made adjustments in our staffing levels. In the first quarter, our gross margin percentage on sales was 36%, which is consistent with the past few quarters and speaks to the health of the secondary broker and end customer sales markets. Ending first quarter utilization increased to 65.8% compared to ending fourth quarter 2009 utilization at 63.1%.

Due to the higher business activity and booking levels we are experiencing with our electronics business and adjustments we've made in our cost structure, we would expect these items to influence favorably TRS-RenTelco's quarter-over-quarter results in the second quarter of 2010.

Now let's turn our attention to Adler Tank Rentals. Our tank rental business produced a 50% increase in revenues -- rental revenues to $6 million from a year ago. The strong increase was directly related to higher business activity levels supported by the addition of new branch locations, increasing the size of Adler's sales force, and expanding Adler's rental equipment inventory.

We are seeing a wide variety of market segments, including industrial plant, petrochemical, pipeline, oil and gas, waste management, environmental field service, and heavy construction.

Although quarter-over-quarter income from operations increased only 11% compared to the higher increase in rental revenues, this is a function of our continuing investment in new employees and other start-up expenses associated with ramping the Adler business nationally. Business activity levels in bookings have continued very favorably into the second quarter of 2010.

Period-end utilization for the first quarter 2010 increased to 64.1% compared to 56.5% at the end of the first quarter in 2009. Looking forward, we are very enthusiastic about the prospects for Adler becoming an increasingly significant contributor to McGrath Rentcorp's earnings.

Now let me take a moment and update everyone on our newest organic initiatives. First, TRS-Environmental, our environmental test equipment rental initiative, made very favorable strides in growing its number of opportunities, rental customers, and rental revenues throughout the first quarter of 2010.

In addition, April was our highest rental booking month to date and our outlook for the remainder of the year is very positive. We believe that as the economy improves and project work increases, coupled with our country's increasing sensitivity on environmental matters, we can become a significant rental provider in the environmental test equipment industry.

Our portable storage initiative continued to make good progress during the first quarter of 2010. Rental revenues continued to increase on a sequential quarterly basis in the first quarter of the new year. We are working hard at expanding our portable storage business in the California, Texas, and Florida markets, and we are continuing to explore smaller fleet acquisition opportunities to accelerate our growth. We are also continuing to add sales professionals and operation staff in growing the business.

Lastly, our Mid-Atlantic modular expansion continues to achieve favorable growth. Quarterly rental revenues increased sequentially during the first quarter of 2010 as they have done during each quarter of 2009. We are continuing to make good progress in capturing new educational classroom rental business with our innovative classroom products designed specifically for these markets.

We are also growing our level of commercial market opportunities. Our outlet for growing the base of rental revenues and profitability for the Mid-Atlantic region during 2010 is very positive.

Keep in mind that all of these initiatives are relatively small today compared to our legacy rental businesses and Adler Tank Rentals. Collectively, between our environmental test equipment, portable storage, and Mid-Atlantic initiatives, they are contributing on an annualized basis just over $5 million in rental revenues.

It should also be noted that these results were achieved during a severe recessionary period. That being said, we believe that we'll be able to grow the current base of rental revenues for each of these new initiatives to much higher levels as we move forward in an improving economy.

Now for some closing remarks. Essential to our overall earnings improvement are the recovery of our California modular classroom and commercial rental markets. The good news is that we are seeing some positive signs to support higher rental revenues, including the $6 billion in state bond sales in March in part to support additional school modernization projects, an increased number of larger commercial construction project opportunities primarily associated with state infrastructure and public works projects, and a solid increase in our rental booking levels in California for the first two months -- four months of 2010 over the comparable period in 2009. What is less certain is the timing of when we will see a more significant level of school modernization project opportunities.

I couldn't be more enthusiastic about all of the positives McGrath Rentcorp has working for it today towards generating higher rental revenues, earnings, and share value through both our legacy and new rental businesses. The broader platform of rental products in geographies in place today should serve our future earnings growth very favorably.

And it will be our employees and their ability to execute on all of our plans that will make the difference. Our employees come to work each day with enthusiasm and an understanding of the opportunities before them in making each of our businesses significant in scale, highly profitable, and better than the best of our competitors. They are in their sweet spot when working on creating competitive differentiation, growing the customer base, and refining our operating models. They are our most important assets towards achieving success.

It shouldn't go unmentioned that 2009 marked the 18th consecutive year that McGrath Rentcorp has increased its dividend. At our current share price, the dividend yield is approximately 3.5%. We believe McGrath Rentcorp shares offer the best of both worlds. We have a very favorable growth platform to support higher earnings in share value levels, and quarterly, our investors receive a return on their investment in the form of a cash dividend.

Finally, we invite you to join us at our upcoming shareholders meeting on Tuesday, June 8 at our corporate headquarters in Northern California's Sales and Inventory Center in Livermore, California. If you are attending, during your visit we would be pleased to provide you with a tour of our 140-acre facility and in particular, our modular, portable storage, and tank rental products and operations.

And now Keith and I welcome your questions.

(Operator instructions). Your first question comes from the line of David Gold with Sidoti.

A couple of questions for you. One, wanted to get a little more color, if you can, on how -- basically on how best to think about California. Obviously it's tough for all of us, and I guess for you guys as well, to think that through. But I guess there was a big court decision yesterday, and if I understood it right it allows the governor to take a couple of billion dollars that were being held for redevelopment and transfer it to school operations. Does that affect you? Does that basically pull from redevelopment funds that potentially would have been put to schools? And then doesn't that make you think that it's more likely that we'll see dollars going to basically operating, keeping the schools going for a little bit longer than to redevelopment anytime soon?

David, I read the headline on that today and I just read the brief [opening]. I don't think it's -- quite frankly I don't think it's very material towards us and the dynamics of modernization of schools. I mean there are bond sales that support that. The local school districts are flushed with bond monies.

So I think now with the bond sales in March, the $6 billion then. In fact the state just sold -- was able to sell another $3 billion in bonds yesterday which are actually to refinance some debt. But I think the landscape of these bond sales in March and the austerity that has occurred over the last year to 18 months with schools, I think that bodes well for us going forward.

I'm going to read more on that which you shared in terms of the governor's ability to borrow, but we (multiple speakers) --

It might be steal and not borrow.

Well, at the end of that, I just don't think it would be material. And if we determine it to be more, we'll certainly share more. But I just don't think it is from everything that I've read prior to that that was being proposed; I don't think there were a lot of shockwaves that we felt here.

Okay. And then I guess part two of that. What -- as we think about the sort of likely outcome for, I don't know, the next nine months, presumably I mean you guys -- California still has to pass a budget and then once that happens -- I mean, you know, I guess this will leave a big gap -- but once that's all sort of said and done, do we think that you see some more off-season rentals this year because of that pent up demand? Or do we sort of miss most of the booking season and have to sit out for another nine months?

You know I think that -- quite frankly I think it's a mixed bag. I think there are some districts that, if the funding is there, they're going to move forward, and now that the state has sold bonds and also the local coffers are fairly full with bond monies, I think it's a mixed bag. And I think we'll see some more bookings this -- before the end of the ordering season this year. And I wouldn't be surprised if we saw some off-season activity. So hard to tell at this point, but we -- our feedback from districts is that there's a mix, so.

Okay. All right. And then can you speak a little bit to the mix of -- to equipment purchases, the $25 million that you spent? Looks like that was going into modular largely. Was that containers for the new initiatives or --?

Of the $25 million, roughly half went into Adler, and Adler continues to be a focus area for us. It was last year. It continues to be this year. Then the other important area we have started putting more capital into is our electronics business. You will have seen that utilization has been edging upwards over the last few quarters, and as we see more health in that business, we're returning to what I call a more normal turnover of the equipment pool, so you'll see us put some more capital in there.

And then within modulars, that does include our portable storage initiative, and we're certainly investing in that initiative as well as supporting some of the regional growth in the Mid-Atlantic.

Got you. Got you. Okay. And just one last if I might. Pricing in TRS looks like it continues to come in some. What are you seeing out there?

The pricing environment has been fairly stable. Some of what you see in price changes is mix of equipment, and that is probably the biggest dynamic there where you have the general bridge. You're doing more general-purpose equipment rentals that has lower rental rate but longer lives as opposed to communications. So that's -- when you look at those numbers for Q1, that's probably what you're seeing.

Perfect. Perfect. Okay, thank you both.

Your next question comes from the line of Scott Schneeberger with Oppenheimer.

I think I didn't see it in this press release, but we had talked before with the annual guidance on the top line or at least a feel for that modular down in the single digits, mid-single digits. Is that still what we're talking about for that segment?

Yes, I don't know that we quantified what the decline would be in modulars but certainly we did say that for 2010 on the rental revenue side, modulars we fully expect to be lower than 2009. And then we expect some growth at TRS and at Adler. And then that has the potential to add on to a low-single digit percentage increase at the consolidated level for rental revenues.

Got it. All right. Thanks for the refreshment, Keith. Did the -- it sounds like nothing is really off from that outlook at this point?

No. No general change.

Okay.

And a comment just to add to that is we had a very nice uptick in bookings in the first four months in California, and x-amount of those bookings have not -- are not in the billing system yet. I mean they've shipped but not billed. And overall for the division they're up about 15%, of course California being the biggest part of that. So -- and the schools' ordering season is not completed yet in terms of what will be in there that will flow into late Q2 and Q3 billings.

Okay. Thanks, Dennis. Switching up. On the matter of modulars, how does the mix look? With the initiative in the Mid-Atlantic, roughly, how big is California any more, just any granularity you can provide with regard to California, Texas, Florida, Mid-Atlantic?

Well, California is probably somewhere in the 65% to 70% of total rental revenues for the modular division. Keith, I think that's fairly consistent?

Correct.

And as you know, the Mid-Atlantic is considerably smaller than our other divisions. However, it's growing very nicely. We won't for competitive reasons break out just how well we're doing there, but it's grown sequentially for the last five quarters very favorably.

When you look at Texas and Florida, they're certainly down some from their higher levels but starting to show recovery. And those percentages make up the bulk of -- you know, they're -- call them about even between the two of them that make up the difference there.

Thanks. And then still within modular I was curious about the commercial construction project opportunities you're seeing? Could you take us a little deeper on that, Dennis? What's driving that? Is it just infrastructure or broader?

What's driving it is in part some federal stimulus monies but also state bond money sales that a few years ago we had $30 billion in bond sales in November of '06. And those bonds are -- a lot of that work got deferred and we're starting to some impact from that. It's very broad based. I mean, we're seeing transportation systems, bridges, dams, roadways, every type of almost public works type project you can think of.

And that -- in some respects it kind of reminds you a little bit about the FDR era and that leading the country out of recession. So California, that work is plentiful. We've seen a very strong first four months of that type of activity. And as I mentioned in my prepared comments, the good news is a lot of that work is -- in fact almost all of it is larger building work and it's for multiyear terms. So that's the rental that keeps on giving in the commercial market. So there's a lot of potential goodness there.

Okay. Sounds good. And just on that last sentence you said, potential versus realized. Is it -- are we starting to see really good realization or is it still more in the potential phase?

No. Our bookings are up, and they're up in particular related to obviously schoolwork coming online but also commercial construction of the nature I just mentioned. I mean, that's a big supporter when you look at the uptick in bookings over last year, that's a part of that -- a significant part of that. But the good news is that that's continuing. In my rounds with our sales force just this morning talking about what is in the opportunity pool, just feels very good, let alone what we booked to date.

Okay. Thanks. Just a couple more if I could. Incremental investment in Adler sounds like feeding the relatively hot hand. I guess, duration -- going to just indefinitely continue to feed Adler really in a multiyear growth phase here?

Yes, we -- I don't think there's any question we're in a multiyear ramp of that business. We -- of course the acquisition was finalized in December of 2008. We had, I think, a very strong year in probably the most difficult year of our economy in the last 70 or 80 years, and we were able to grow. And the first part of this year has just been tremendous.

When you look at expanding that into a national footprint, which we've been making investment in 2009 and we continue in 2010, there's a lot of runway to become a very significant player. And we're making all the -- what we believe are appropriate investments to ramp that as soon as we can to take advantage of an improving economy. So we're very excited about Adler.

All right. Thanks. And one last one from me. What are you specifically buying and selling in TRS and why?

Well, if you look at selling, typically as assets get older in their age, their utilization optimization declines. So we're selling off older equipment as new technologies come along. But you also maintain x-amount of the older because x-amount of customers still use that technology. And you've got to -- what you need to be buying is the latest technology, whether in communications or general purpose test equipment.

So it's really an orderly exchange of older going out, newer coming in, and as I mentioned in my prepared comments, the margins are holding very nicely in our used sales numbers.

Great. Thanks, guys.

Thanks, Scott.

(Operator instructions). Your next question comes from the line of Jamie Sullivan with RBC Capital Markets.

In TRS, if you listen to what some of the OEMs and instrumentation providers talk about, they seem to be really exceeding their plans and kind of ahead of schedule versus expectations. I'm just wondering is that sort of how things have trended for you and TRS? I know there are a lot of puts and takes in other parts of the business, but is TRS still kind of running hot versus your expectations?

They're running very favorably. I mean, they're -- if you look at bookings for the first four months of 2010 over 2009, we're up about 21%. And it feels like business is improving from there. So April, it was a strong month, so the trend is later in the quarter here we're seeing -- in Q1 we saw improvement and then April, if you look at our -- we actually have our rental billing number in now. It was up nicely over March, so the trajectory feels very good. In speaking with division management, the pipeline also feels very good.

Know that the first part of the year there's some seasonality to that business on the communications side, so we would expect the latter part of the year to have more opportunity in that part of the business. The first part of the year was predominantly related to general purpose. That's where we were seeing the ramp, so we feel very optimistic about the rest of the year.

And, Jamie, it's worth pointing out for that division typically the first quarter is a seasonally slower time for business. So I think we were very pleased with what we saw in terms of results from the first quarter, and we typically expect to see the business growing from that point forward.

Right. Thanks. And then I guess moving to modular, I think you said California, bookings there up 15% year-to-date?

Actually, California was approximately 25%.

25% year-to-date. Would the orders be up at a similar level sequentially or are we coming off a real trough from 1Q '09?

Well, there's no question 2009 was a challenging four months as measured against, and I don't have it in front of me Q4, but I have somebody looking for that right now.

Okay. I guess I'll move on to my next one then, unless you have it handy.

Let's work on your next one and in the meantime we'll do the quick math on that.

Sure. Okay. The -- you mentioned that the California bonds, the $6 billion. Were those general obligation bonds?

There were both taxable and nontaxable. There was a variety of bonds, but the majority are general obligation.

Okay. And it sounds as if your description was that the state and the districts both have a fair amount of cash to put to work at this point. What -- ?

Yes. And to add to that, what some districts did was they actually, through their local bond sales, they actually started some of their projects because they could fund it themselves and they are reimbursing themselves off of monies coming in from the state or when they will come in in the future. That's how favorable local bond sales have been over the last couple of years.

Okay. And so (multiple speakers) --

By the way, Jamie, we (multiple speakers) --

Yes. I'd say they are up nicely from Q4.

Yes. We're actually doing the (multiple speakers) --

Yes, up nicely.

So, did you get that, Jamie?

Yes. Up nicely? Was - so, year-over-year --?

We've actually -- Dave's actually -- we did the quick look and Dave's actually doing the math, but they should be up very nicely, so.

Okay. All right. And so I guess with the money flow in California, is there a milestone that we can pay attention to or watch for as the money works its way through? Or is it simply a bureaucratic decision that pulls the trigger because the money is just there ready to go and the projects are already laid out?

My understanding of how the system works is that the state goes out and sells the bonds and then they determine how the money gets distributed amongst the different states, either educational or other infrastructure needs. And so we typically find out fairly quickly after the bond sales how the money is going to be spent. But we know when the dollars are as big as they are and with the other information we're getting from our lobbyists that there's favorable amounts going towards education.

We also benefit on the other -- going to infrastructure development because -- and that's what we're seeing now in the higher booking levels in Q1 and the opportunity pool increasing on related state, county, local government infrastructure. And by the way, I also might mention university systems on the community college level as well.

Hold on just a second, I think we have it.

Yes. I would say Q1 bookings were roughly double what we saw in Q4. And again, you have to keep in mind seasonally, particularly in education, Q4 tends to be a slower period for bookings. So, up substantially.

And with that caveat of (multiple speakers) --

And with the caveat -- it's not necessarily an apple to an apple, in that bookings for education are not as significant in Q4 as they would be in Q1.

All right. I guess -- and how do cancellations work in education if they're booked now and for some reason the projects don't move forward in the fall? Is there a cancellation fee? How does that work?

Yes. I've got to be honest with you. Cancellations are extremely rare when you book a school project or a large project. And if -- so typically, if it's a standard product and it got cancelled and you held inventory in some way, you could charge them. But cancellations are just not a common occurrence at all.

Okay. And then just one last one and I'll hop off. So TRS bookings very strong, mobile modular bookings very strong, typically have pretty good visibility there. I'm wondering was that sort of what you were planning or is that -- are we kind of ahead of schedule? I'm just wondering in terms of the guidance, would that put it towards the higher end of the range or --?

Here's how I'd characterize things if I can. I'd say modulars is favorably strong. I'd say electronics is feeling considerably favorable and stronger. I would say Adler is very, very strong. And I would say with our new initiatives, they are both doing very favorably. And in particular, portable storage is continuing to hit some very good numbers month after month. So that is how I would kind of sum it up.

And I think, Jamie, somebody said earlier the thing to keep in mind is these comparisons are against a very weak year in 2009. I think we expected to see a bounce back in 2010, and I think the comments you're hearing say yes, we've been seeing that from a bookings point of view, and in some of the parts of the business, it's already reflecting in rental revenues. In other parts of the business, it'll take a little longer to work through. But I would say things are playing outs broadly in line with what we'd expected if you look at the business as a whole.

We might also add that keep in mind for modulars that the school piece of things, typically you're not going to see income statement impact for the most part until Q3 because most of those projects ship late in Q2 or during Q3; so that's the typical way that product works.

All right. Thanks for the time and all the detail on the call.

All right, Jamie. Thank you so much.

And at this moment I am showing there are no further questions. Gentlemen, I'd like to hand the call back to you for closing remarks.

Well, thank you all for joining us on this afternoon's or this evening's call, and we have our upcoming annual meeting here, and we'd love to see as many of you as we can. If you can't otherwise, it will be webcast and you can listen in then. So thank you all for your continuing support. Have a nice evening.

Thank you for your participation in today's conference. This concludes your presentation. You may now disconnect. Have a great day.