Geoffrey Buscher - SBG Investor Relations Dennis Kakures - President and Chief Executive Officer Keith Pratt - Senior Vice President and Chief Financial Officer.

Scott Schneeberger - Oppenheimer David Gold - Sidoti Joe Box - KeyBanc Capital Markets.

Good day and welcome to the McGrath RentCorp Fourth Quarter 2014 Conference Call. At this time, all conference participants are in a listen-only mode. Later, we will conduct a question-and-answer session. This conference is being recorded today, Thursday, February 26, 2015.

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

Good afternoon. I am the Investor Relations Advisor to McGrath RentCorp and will be acting as moderator of the conference call today. 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 7 days following the call by dialing 1-888-203-1112 for domestic callers and 1-719-457-0820 for international callers. The passcode for the call replay is 5298819. This call is also being webcast live over 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. A press release was sent out today at approximately 4:05 Eastern Time, or 1:05 Pacific Time.

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 relating 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 for the quarter and the Form 10-K for 2014.

The company also announced a 2% increase of the cash dividend to $0.25 per share for the first quarter of 2015, representing on an annualized basis a 3.2% yield on the February 25, 2015 closing stock price. For the fourth quarter 2014, total revenues increased 18% to $111.8 million from $94.8 million for the same period in 2013.

Net income increased 18% to $13.9 million from $11.8 million and earnings per diluted share increased 18% to $0.53 from $0.45.

Reviewing the fourth quarter results for the company’s mobile modular division compared to the fourth quarter of 2013, total revenues increased $9.9 million or 29% to $44.4 million due to higher rental, sales and rental-related services revenues. Gross profit on rents increased $3.7 million or 32% to $15.2 million.

Rental revenues increased $4.7 million or 21% and rental margins increased to 57% from 52% as depreciation as a percentage of rents was flat at 17% and other direct costs as a percentage of rents decreased to 27% from 31%.

Selling and administrative expenses increased 17% to $11.3 million primarily as a result of increased headcount, salaries and benefit costs.

Higher gross profit on rental, sales and rental-related services revenues partly offset by higher selling and administrative expenses resulted in an increase in operating income of $3 million or 51% to $8.9 million. Finally, average modular rental equipment for the quarter was $627 million, an increase of $67 million.

Equipment additions supported growth across all regions and our portable storage business. Average utilization for the fourth quarter increased to 74.9% to 70.5%.

Turning next to the fourth quarter results for the company’s TRS-RenTelco division, compared to the fourth quarter of 2013, total revenues decreased $1.5 million or 4% to $33.8 million, due to lower rental and sales revenues. Gross profit on rents decreased $1 million or 7% to $11.9 million.

Rental revenues decreased $0.9 million or 3%, and rental margins decreased to 47% from 49% as depreciation as a percentage of rents was flat at 40% and other direct costs as a percentage of rents increased to 13% from 11%. Selling and administrative expenses decreased 8% to $5.9 million primarily due to decreased marketing and administrative costs.

Lower gross profit on rental revenues partly offset by higher gross profit on sales revenues and lower selling and administrative expenses resulted in a decrease in operating income of $0.4 million or 4% to $10.4 million. Finally, average electronics rental equipment at original cost for the quarter was $262 million, a decrease of $7 million.

Average utilization for the fourth quarter increased from 61.2% to 63.3%. Turning next to the fourth quarter results for the company’s Adler Tanks division compared to the fourth quarter of 2013, total revenues increased $3.7 million or 16% to $26.8 million, due to higher rental and rental related services revenues.

Gross profit on rents increased $1.5 million or 14% to $12.7 million. Rental revenues increased $1.7 million or 9% and rental margins increased to 65% from 63%. As depreciation as a percentage of rents was flat at 20% and other direct costs as a percentage of rents decreased to 15% from 17%.

Selling and administrative expenses increased 15% to $7.1 million primarily due to increased headcount, salaries and benefit costs. Higher gross profit on rental and rental-related services revenues partly offset by higher selling and administrative expenses resulted in an increase in operating income of $1.1 million or 21% to $6.6 million.

Finally, average rental equipment for the quarter was $298 million, an increase of $23 million. Average utilization for the fourth quarter increased from 60.8% to 65.1%.

On a consolidated basis, interest expense for the fourth quarter of 2014 increased $0.2 million or 8% to $2.4 million from the same period in 2013 primarily due to the company’s higher average debt levels, partly offset by lower average interest rates.

The fourth quarter provision for income taxes was based on an effective tax rate of 42.7%, compared to 39.2% in 2013.

The higher tax rate was driven by the full year 2014 effective tax rate rising to 40.3% as compared to 39.2% for 2013, primarily as a result of higher business levels in states with higher tax rates and the resulting repricing of deferred tax liabilities. Next, I would like to review our 2014 cash flows. For the 12 months ended December 31, 2014.

Highlights in our cash flows included net cash provided by operating activities was $123 million, a decrease of $10.6 million, compared to 2013. The decrease was primarily attributable to an increase in accounts receivable, partly offset by an increase in deferred income and other balance sheet changes and higher income from operations.

We invested $152.2 million for rental equipment purchases compared to $132.6 million for the same period in 2013. Property, plant and equipment purchases increased $0.7 million to $12.7 million in 2014. Net borrowings increased $32.5 million from $290 million at the end of 2013 to $322.3 million at the end of 2014.

Dividend payments to shareholders were $25.6 million. With total debt at quarter end of $322.5 million, the company had capacity to borrow an additional $227.5 million under its lines of credit and the ratio of funded debt to the last 12 months actual adjusted EBITDA was 1.89 to 1.

For 2014, fourth quarter adjusted EBITDA increased $6.6 million or 16% to $48.2 million compared to the same period in 2013, with consolidated adjusted EBITDA margin at 43% compared to 44% in 2013. Our definition of adjusted EBITDA and a reconciliation of adjusted EBITDA to net income are included in our press release for the quarter.

Turning next to 2015 earnings guidance, we expect 2015 full year earnings per share to be in a range of $1.75 to $1.95 per diluted share. For the full year 2015, we expect 6% to 11% growth in rental revenues over 2014. Sales revenue is expected to be approximately 10% lower than 2014.

Rental equipment depreciation expense is expected to increase to between $76 million and $79 million driven by rental fleet growth. Other direct cost of rental operations, primarily for rental equipment maintenance and repair are expected to increase to between $60 million and $63 million in 2015.

Selling and administrative costs are expected to increase to between $104 million and $107 million to support business growth. Full year interest expense is expected to be between $10 million and $11 million.

We expect the 2015 effective tax rate to be 39.5% and we expect the diluted share count to increase modestly from 26.2 million to between 26.3 million and 26.5 million shares. Now, I would like to turn the call over to Dennis..

Thank you, Keith. Now, let’s take a closer look at each rental business for the quarter. Modular division-wide rental revenues for the quarter increased $4.7 million or 21% to $26.8 million from a year ago. This is the seventh consecutive year-over-year quarterly rental revenue increase for our modular division.

During the fourth quarter, we experienced a 3% increase in division-wide year-over-year first month’s rental revenue bookings for modular buildings, and a 33% increase for all of 2014 over 2013. We are also continuing to see rental rates rise for various sized products as demand exceeds readily available supply.

Modular division average and ending utilization for the fourth quarter of 2014 reached 74.9% and 75% respectively, an increase from 70.5% and 70.7% a year ago. This is the highest modular division fourth quarter average utilization level since 2008.

Modular division income from operations for the quarter increased to $8.9 million or by 51% from a year ago. This strong increase in profit was driven primarily by higher rental revenues and the rental revenue margin expansion. Gross margin on rental revenues increased to 57% for the quarter from 52% a year ago.

Direct cost associated with readying equipment and inventory center operations as a percentage of rental revenues decreased to 26.8% from 31.2% for the same period a year ago and from 36.3% during the third quarter of 2014.

Although our year-over-year quarterly building preparation expenditures continue to be at a high level due to favorable market demand, we are now beginning to see the benefit of an increasing base of rental revenues.

During the quarter we also benefited from higher profit on equipment sales and rental related services, partly offset by higher SG&A expenses.

The higher SG&A costs were primarily related to increased sales and operations staffing levels to support the recovery of a modular rental business as well as the continuing expansion of our portable storage rental business. Now, let’s turn our attention to Adler Tank Rentals and their results.

Rental revenues at Adler Tank Rentals, our liquid and solid containment tank and box division, increased $1.7 million or 9% to $19.5 million from $17.8 million a year ago. In fact this was Adler’s highest quarterly rental revenue level attained to date.

It’s important to note that only approximately 14% of total Adler or 4% of total company rental revenues for the fourth quarter of 2014 were derived from upstream or well head oil related projects.

Although our exposure to upstream oil related projects is limited, over the next few months we are cautious of any potential related negative impact to both midstream and downstream vertical markets.

As we were serving a wide variety of market segments including industrial plant, petrochemical, pipeline, oil and gas, waste management, environmental field service and heavy construction. Average utilization was 65.1% for the fourth quarter of 2014, up from 60.8% a year ago. Ending utilization for the quarter was 63.9% compared to 57.7% a year ago.

Further, fourth quarter average equipment on rent reached $194.2 million, a 16% increase over the same period a year ago. During the first half of 2014, we experienced project delays that have contributed to the higher utilization levels over the last four months of the year.

Overall fleet average monthly rental rates for the quarter declined to 3.35% from 3.55% a year ago. This is reflective of a continuing highly competitive market for 21K tank rental assets.

We are likely to see continuing downward pressure on 21K tank asset rental rates during 2015, primarily due to the supply and demand dynamics associated with a weakening upstream oil market.

Original cost of total rental equipment increased to $303.3 million at the end of the fourth quarter 2014, up less than 7% from $284 million at the end of 2013 and up less than 2% during the second half of 2014.

Despite having meaningful earnings horse power potential from our existing pool of unutilized rental assets we are selectively purchasing boxes in specialty tank products primarily to support our newest markets and longer term contracts with well established customers.

Adler’s tank rental income from operations for the quarter increased $1.1 million or 21% to $6.6 million from $5.5 million a year ago.

In addition to the increase in rental revenues for the quarter other factors contributing to the increase in income from operations from a year ago included higher profit on rental related services, lower inventory, rental-related expense offset by both higher SG&A cost related to employee headcount, salaries and benefit costs as well as higher depreciation expense.

Now, let me turn our attention to TRS-RenTelco and their results. Rental revenues for TRS-RenTelco, our electronics division declined by $0.8 million or 3% to $25.4 million from $26.2 million a year ago. Income from operations for the quarter declined by $0.4 million or 4% from the same period in 2013.

Although full year first month’s rental bookings were 2% higher for 2014 over 2013 first months rental returns were up 3%. The combination of relatively flat net first months rental booking growth coupled with shorter average rental returns in 2014 compared to 2013 drove the quarterly year-over-year and annual declines in rental revenues up 3%.

We believe the increased churn of rental equipment is chiefly driven by a larger mix of communications versus general purpose test equipment rental business in 2014 compared to 2013. Communications test equipment rentals typically have shorter rental terms than general purpose test equipment.

Average utilization was 63.3% for the fourth quarter compared to 61.2% for the same period in 2013. Period ending utilization for the fourth quarter was 59.8% compared to 58.2% a year ago. Now, let me take a moment and update everyone on our portable storage business.

Mobile modular and portable storage continued to make good progress during the quarter as it has throughout 2014 in building its customer following, increasing booking levels and growing rental revenues over 2013 Rental revenues for the fourth quarter and full year 2014 grew by 42% and 41% respectively.

Individual branch as well as overall business segment profitability is continuing to grow. We entered the Greater Chicago and Charlotte markets during 2014 and are targeting it further regional expansion during 2015. We are on track towards building a meaningful size portable storage rental businesses with attractive operating metrics.

Now, for a few closing comments. As we turn the corner in 2015, the company’s historically most profitable modular building rental business has significant momentum. The California market is only in the early stages of recovery especially Southern California.

As the modular rental business in the golden stake struggled from the onset of the great recession through 2013 we were able to build a very significant module business in both Texas and in the mid-Atlantic as well as the Florida business improved markedly.

Our electronic business is an industry leader with very strong operating profitability metrics, however, it is not immune from periodic high tech aerospace and defense or communication sector softness. Our liquid and solid containment rental business is a national player [ph] today with solid earnings and significant long term growth potential.

Despite Adler’s success over the past few years had greater diversification of its rental revenue mix in the vertical markets outside of upstream E&P projects, the recent steep decline in the price of oil creates uncertainty going forward.

This uncertainty is not only related to well head opportunities but also to both midstream and downstream business levels due to reductions in capital spending as energy companies look to manage the reduced cash flows. Lastly, our portable storage rental business is growing favorably in rental revenues, earnings and geographic footprint.

We are looking forward to continuing to turn the flywheel daily and building each of these enterprises. As we begin the year our guidance range of $1.75 to $1.95 per diluted share for full year 2015 is brought. In particular due to the uncertainties with both our electronics and tank and box rental businesses.

Please keep in mind that McGrath RentCorp has a very strong balance sheet with funded debt to last 12 months adjusted EBITDA ratio of 1.89 to 1 and with the current capacity to borrow an additional 227 million under our lines of credit.

We can be very opportunistic in growing our business lines and pursuing new strategic opportunities with the availability of such funding. Last, the company has just declared a quarterly cash dividend of $0.25 per share for the quarter ending March 31, 2015 an increase of 2% over the prior year period.

This marks the 23rd consecutive year in which McGrath RentCorp has raised its dividend. On an annualized basis this dividend increase represents a 3.2% yield based on yesterday’s closing stock price. We are very pleased to continue our practice of providing a quarterly return on investments to our shareholders.

And now Keith and I welcome your questions..

[Operator Instructions] We will take our first question from Scott Schneeberger of Oppenheimer.

Hi, good evening guys can you hear me?.

Yes, hi Scott..

Hi, great, thanks. In [Indiscernible] just anecdotally what are you hearing from the school districts it looks like some really nice momentum.

I’m just a little bit more curious on what you are hearing on the street with regard to commentary and in the pipeline for – contents?.

Well you don’t have to look at school markets by geography and first of all we’ve had some – we continue to have good success in the mid Atlantic. The Florida market has turned very favorably. Texas market was very strong this year.

The California market in Northern California we saw some uptick, a better year than last year but certainly not that to the standards we’ve been accustomed to. In Southern California quite frankly which was in fact the largest portable classroom rental market really in the country still lags well behind.

So there’s a lot of potential opportunity in California with classroom rentals going forward based upon how the funding dynamics get resolved..

Great. Thanks.

Switching on to Adler, with specifically with regards to oil and gas exposure, could you tell us what you are hearing from customers in the oil field potentially, how has placing been affected also thus far are you still in early innings of people reacting the oil prices or do you think there is more yet to come, the bigger piece more yet to come, just curious on where we are truly [ph] and what the pricing discussions are? Thanks..

Well let me start with the second part of the question, pricing. Pricing needless to say with E&P companies and oilfield services companies being impacted negatively the E&P companies squeeze the gas offered [ph] service companies and of course they squeeze their suppliers.

So there certainly is a downward pressure on pricing to lower cost, obviously because the cash flow and revenue stream is down due to the precipitous drop in the price of oil.

But let’s remember something here, every company has its own set of variables that really drive its economics and then also by shale region, some shale regions are less expensive to be able to extract shale oil and gas and also get it to market, transportation costs etcetera.

For instance, the Bakken is likely the most expensive region in the country, but then if you look at areas like the Permian and some other plays, it’s less expensive.

So individual company capitalization and the various dynamics of shale plays and the infrastructure to get oil to market or gas to market plays significant – has a significant impact on the economics for each individual company.

So we have found some or they will continue not only drill, but complete the wells and they are still sending a product to refineries et cetera. Whereas others may just drill the well, not complete the well and be ready to go as soon as economics get better on oil prices to go ahead and extract those fuels.

So it’s really different by company and we use to say, we are monitoring by region, the different dynamics and also by customer based upon where we think we’re likely to get our best opportunities and also understanding those perhaps holding back some their time frames in which to go ahead and complete wells et cetera.

So that kinds of gives you an overview, but I think we’re sitting here today, we had about $50 a barrel on West Texas intermediate crude and of course the Brent crude prices in that similar neighborhood and I’m not sure of anybody has a good long term view of what the dynamics are going to be.

But we all understand if too much production is cut back at some points that’s got to reverse itself. So the best we can do is try to be stay close to each company, understand their balance sheet, understand there from a credit quality standpoint, make good decisions there.

And then monitor variety of variables everything from rig counts to other dynamics hedging. You look at companies, some companies have already hedged in 2015 and they can continue to drill and complete wells and its favorable other ones have to pull back. So there’s quite a few variables that we give attention to in assessing things.

But we’re in the early inning here. I don’t think anybody really has a good grasp on how this is all going to play out this year..

Great. Thanks for the color, David. And I’ll turn it over..

And we will take our next question from David Gold of Sidoti..

Hi. Good afternoon..

Hi, Dave..

Hi, David..

Just a couple of questions. First, some commentary there in the release on repair and maintenance step up to next year presumably embedded in the guidance.

And on the mobile modular side, I just wanted to get some color there? What’s pushing that, is it’s specifically California classroom, and so it’s a product types and geographic I guess that’s where to start?.

Yes. I would say California is a big market where we have – we’ve improved utilization, but we still have a long way to go. And both on the commercial side and on the classroom side as we get opportunities to put more of that equipment out, we will encounter some elevated cost to prepare the equipment.

We saw some of that during 2014, our plans were expecting to see more of it in 2015 and our initial assessment is it could easily be 5% to 10% higher spend in that area for the modular business. And I would say California will be a significant market for incurring those costs..

Got you..

David, I would just add a comment to Keith. That assumes that demand continues as strongly as it has been. If for whatever reason that tapers off etcetera we’re going to able to pull – we can – that’s one area we can flex very quickly in reducing our costs and we get some very significant benefit by doing that.

But our outlook is that we will going to have a very favorable year in growth in rental revenues..

Got you.

So, presumably if your June repairing maintenance on containers or classrooms that are been on the beach if you -- on the sidelines for some time, presumably that implies a pretty commencer increase in utilization?.

If we are spending those kinds of [indiscernible] that’s exactly correct. There should be a material increase in utilization for the year..

Okay. Perfect. And then, talk a little bit of you can about, I know you gave some color on your upstream exposure, but you also noted, I guess you have inserted DM [ph] downstream and midstream.

Can you a sense for what the revenue base looks like today if we thought about oil and gas in its integrity?.

The way I had frame it David is there’s about another 7% or so of the Adler rental revenue mix related to upstream gas. And as you heard us mentioned in the prepared remarks 14% related to upstream oil. So if you take those together you are right around 20%, 21% neighborhood..

Okay.

And if we – and then, as the downstream and midstream?.

Yes. We don’t generally break those out, they’re probably smaller percentages, but we don’t generally break those out..

Okay. Got you. I guess, as much what I’m trying to get a sense for was, their wide variability and some of that share attributed to the risk from oil, so I just to sort of give it a better sense of it there’s another way to get there.

As to how we should think about what place out to bring the 175 versus the 195?.

David, I think you only way that any company, so they can really look down the road here. We’ve got to wait for the next few months to play out and continue to learn from the different variables that are out there and demand on one side and just how – how much pullback is there going to be on production et cetera.

So it’s – that why our range is so broad, we don’t have a good compass. We’re not good prognosticators on determining the future here. And if somebody is, if you certainly haven’t given us a call, we’d love to chat with them..

Got you. Okay. One other just quick one. When we think about trend of both Mobile Modular and Adler spoke this commentary in the release about increased employee headcount in both of those businesses, and curious if you can give some color as to what areas you been adding headcount? So in another words…..

Primarily it’s in the sales area. We actually are sales people in mobile businesses and obviously we’re selective on who we hire and we want to get the right people, but it’s really on being able to feel the opportunities. We need more people to be able to manage the demand side..

Perfect. That’s all. Well, thank you both..

Thank you..

[Operator Instructions] We will take our next question from Joe Box of KeyBanc Capital Markets..

Hi, guys..

Hi, Joe..

Hi, Joe..

So, Keith, I appreciate you walk in through some of the individual guidance components earlier. I’m just curious because if you add back the tax benefit this quarter your guidance for next year is really looking at flat to up 11% earnings growth.

Can you maybe just walk us through some of the assumptions that you’ve made to get that flat earnings number and then maybe what you need to do to get to that 11% plus and I know we’ve already talk about couple of them in terms of rates and contagion maybe a little bit more inventory center cost, but I’m just hoping you could maybe frame a little bit better for us?.

Sure. I’ll try and be helpful in a couple of ways. I think the first thing to start with is, look for 2014 at where we saw growth in operating income. And if you look at the business as a whole in 2014, we had 6% growth in operating income, but quite a disparity and where that came from. The modular’s operating income was up 53% year-over-year.

We were down 2% at Adler. We were down 6% at TRS. So, as we enter 2015 the way I would sort of frame the thinking is we still see the modular business is having the greatest potential. They contribute to growing operating income.

And if you look at the other two divisions, first of all, this is seasonally a tougher time of year to really get a read on a health of the business. It seasonally slow at Adler. It seasonally slows at TRS. That’s typical for this time of year, so a little of caution. We’ve seen a slower start particular at electronics.

We’ve seen that in the past as well but that’s where we’re dealing with when we look at today. If you look at what gets you to the sort of the goal posts on the range and we entered the year knowing it’s a more difficult climate for oil and gas. And I think that’s based in if you will to the middle neighborhood of how we’re thinking about Adler.

But there are certainly some scenarios where there are some new opportunities for business there that could give us a bit of a lift. There is also a lot of risks and uncertainty that could pull us the other way as Dennis comment earlier. So that’s the way to think about it there.

If you look at the business as a whole, look at 2014, we had a nice uptick in the sales side of the business. Modular sales in particular were up from – I think it was $21 million in 2013 to $29 million in 2014. We’re not assuming we’re going to get that level of sales activity.

Now again, if we were fortunate and dig it very healthy sales that gives us an opportunity to push higher in the range, but as we enter the year and sort of look at the middle zone and what our expectation is, we’re really discounting at some of the sales that we achieved in modular.

And again that’s always a very hard part of the business to forecast particularly this earlier in the year. Clearly with all the cost elements we have plans in terms of how we’re going to run the business, the headcount et cetera. It’s always – there’s going to be some play in those numbers.

A lot of it’s tied to opportunity if we’re hiring it, because we see a reason to have a bigger team and pursue more opportunity in the market. If not we can throttle back the other way.

The interest expense you probably have noted is up from what we incurred in 2014, that reflects a couple of things, one is we start the year with a slightly higher debt level than we entered 2014, even though we think the debt will be flattish for the year, it will still mean the average debt level is up slightly from 2014 and we do expect to see a combination of both fed policy resulting in higher variable interest rates for us as the year progresses, as well as the prospect that we might put in some more fix grade debt in our capital structure.

So I know there’s lot of factors to consider but big picture if we look at operating performance in the business, modular had an excellent year in 2014, we see that business is having the most potential as we entered 2015.

The other two businesses we’re just been a little bit more careful around the dynamics there both in market and in terms of visibility that we have this early in the year..

Understood. Thanks for the color on that. Let me just dig into one minor point of that.

In terms of the inventory center cost, correct me if I’m wrong here, but it does sound like maybe demand is coming in little bit better than you’re expecting on the modular side and maybe we’re not getting those costs, but those costs are abating like we were expecting.

So, can you just remind us what was the inventory center headwind on the EPS basis in 2014 and are we think about being flattish in 2015 or even a headwind again?.

Yes. I would say, it’s a headwind in 2015 and I’d remark a little earlier. In a sort of middle ground thinking we’re expecting it could be as much 5% to 10% higher for the modular business than it was in 2014. And 2014 was up materially from the 2013 level..

And Joe, you have to take that in context if that – if we truly comment on that budget range means that the market is pretty much on fire.

I don’t know where to put it, because we’re not going to spending those kind of dollars unless demand is very significant, but there’s a wildcard and this is whatever equipment returns our brand that we’ve already touch and doesn’t need as much maintain repair extra or with that a lower rental rate due to going out during the great recession, we make it some additional benefit and lift there.

But no, we’re going to spend that amount of money in our inventory centers again with the little uptick and that can only – the only bases for that would be continuing very strong demand..

Understood. Thanks.

Switching gears over to the your taxes exposures specifically within the modular business, can you maybe just give us sense of where your modular assets are in that market geographically, I mean, are they pretty disburse through the state and just remind what your commercial versus your education exposure is?.

Well, in terms of our footprint in Texas we are everyone from – obviously the greater Houston market which with refineries petrochemical plants et cetera Dallas, San Antonio, East Texas, [indiscernible] obviously we do work with petrochemical plants as well as refineries et cetera, which we don’t see any slowdowns there in our world thus far.

Obviously the construction industry and a variety of other mix use, needs. Remember that Texas is a very different economy than it was in the 1980s when there were – it was primarily energy based and banking based. It’s much more diversified many more different industries.

You look at – just look at the corridor, I-35 Corridor from DFW to San Antonio, and Austin, I mean, there is significant high-tech element there now et cetera. And Texas has become a much, much more diversified economy..

Right. One question on Adler and apologize if this is somewhat address earlier, but clearly, but – and there is a lot of new players in the market, there’s a lot of new supply that’s come on.

Do you think that these are fungible tanks, and fungible assets that they’ve brought on line recently and are you starting to see any of those assets moving to maybe some of your environmental markets or your downstream market that you’re in and is it having any sort of impact on pricing? Or is that all just potentially down the road?.

There’s been downward pressure on 21K tank pricing for some time now, other assets not so much. And Adler builds a different assets and virtually anybody else in the industry, [indiscernible] product with the very state-of-the-art safety features et cetera, so we spend more dollar on our product.

And the reality is in that business, it has much more to do with how well you serve the customer. If you have a good rental product like Alder and you really, really have done your work with the customer and serving their needs, that would makes the most different of gaining market share and building market share.

Just inexpensive product and somebody go in on the cheap, yes, they can get some business, but over the long term, you don’t tend to build lot of loyalty that way.

That business -- we’ve been in it six plus years now, we’ve learned that those relationship really matter and doing those little extra items and hopefully that’s where we can continue to excel and take market share and also expand as market growth.

Appreciate it. Thank you both..

Thank you..

And this does conclude today conference – today’s Q&A session. Gentlemen, I’ll turn the call back to you for closing remarks..

We would like to thank everybody for joining us this afternoon on the Q4, 2014 call and we’ll look forward to chatting with everyone on the Q1, 2015 call in very early May.. Thank you so much..

And this does conclude today conference call. Thank you again for your participation and have a wonderful day..