Ladies and gentlemen, thank you for standing by. Welcome to the McGrath RentCorp First Quarter 2020 Conference Call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session. [Operator Instructions] This conference call is being recorded today, Wednesday, April 29, 2020.

Before we begin, note that the matters the 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. Furthermore, you should notice that the full impact of the COVID-19 pandemic continues to evolve.

As such, the full magnitude the pandemic will have on the company's financial condition, liquidity and future results of operations is uncertain. The following discussion by management about the company's financial condition is subject to the future effect with the COVID-19 pandemic.

In addition to the COVID-19 pandemic, 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 the Form 10-Q. 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. Please go ahead, sir..

Thank you, Olivia. Good afternoon, and thank you for joining us on today's call. I will start the call with some overall remarks and comment on our first quarter 2020 performance and our look ahead. Keith will provide additional detail in his financial review and outlook comments.

Before reviewing our first quarter performance, I would like to remark on the health and safety of our team members as we have transitioned to a very different working environment over the past six weeks relating to the COVID-19 pandemic.

We made many changes to our operating protocols to ensure that we are in compliance with national and local health-related guidelines and have placed the health of our team members as a top priority.

We are fortunate to have a team that is dedicated and ready to serve our customers and they ensured that the business remained operational across the board while adhering to all additional safety requirements. Many of the companies and projects we are supporting are deemed essential and therefore we are at work.

So now let's turn to our first quarter 2020 performance. First, Mobile Modular delivered a very solid quarter, and demand was healthy in both our education markets as well as our commercial infrastructure markets. Student population growth and modernization projects in many of the markets we serve continue to drive classroom rentals.

At TRS-RenTelco, demand for general purpose test equipment was robust and broad-based consistent with previous quarters. On the communication side of the business, infrastructure for bandwidth expansion was underway to support 5G roll-outs.

At Adler, we continue to see weakness in oil and gas and related industries as demand for oil worldwide slowed thus reducing activity levels. I would like to now address some of the current demand conditions in our environment. Customers are adjusting their plans in real time, so there is a lot of uncertainty.

At Mobile Modular, most education projects appear to be proceeding as planned, and a few are even starting earlier due to schools being vacant. Some commercial construction projects are proceeding, while others are getting pushed out until later in the year and this is varying by geography.

It appears on balance that in the instance of changes to construction projects, the majority are delaying as opposed to canceling plans. At TRS, many of our semiconductor and defense contractor customers are working and are expecting our support.

Some 5G infrastructure projects are pushing out resulting in higher than normal equipment returns and fewer new shipments, but we do not currently expect significant cancellations of installation work that major carriers have planned.

Work in the field has slowed as contractors have had to adjust to new social distancing requirements, but we believe many will be back on the job as shelter in place restrictions are lifted.

At Adler, while upstream oil and gas work is only 9% of division rental revenues, we believe the ripple from the collapse of oil prices is now being felt through the supply chain from less wellhead activity and environmental support work to downstream refinery projects.

Many projects are being delayed with lack of clarity on future starts as the industry deals with an unprecedented supply and demand imbalance. In other markets, construction projects are delaying, but we are not seeing many cancellations at this point.

I would like to stress that the information we are receiving from our customers is fluid and dependent on unpredictable market conditions. Therefore, the level of uncertainty is very high. Projects directly relating to COVID-19 emergency support have been light with many inquiries but no material projects to speak of.

Recovery depends on the pace and success of restarting the economy and getting people back to work on a broad scale. We are expecting challenging demand conditions near term and possibly longer if shelter-in-place restrictions continue in our geographic markets.

Given the changes we are seeing in our operating environment, we are adjusting along with it. We have taken steps to reduce expenses due to a slowing top line. We've curtailed hiring, reduced all extraneous expenditures, delayed less critical projects, and closely examined our CapEx plans for the year, which will be reduced.

I would also like to stress a few things about the durability of McGrath RentCorp and our ability to weather an economic storm like this. We transitioned quickly and successfully to have team members work from home if they can and have our field teams supporting business demand under more stringent pandemic-related operating conditions.

We have many long-term customer relationships and we have seasoned leadership teams running our divisions. We also have a very strong financial foundation to support ongoing business operations. And tying that all together is a group of team members that are dedicated and work well to support our customers and each other.

While the current environment is difficult, we hope for stabilizing and improving conditions as the year progresses. Now, let me turn the call over to Keith, who will take you through our financial review..

Thank you, Joe. Picking up on Joe's comments, our primary focus since the COVID-19 pandemic began to significantly impact the US has been on the health and safety of our team members and then business continuity to service our customers. Our teams have done a great job in moving quickly to adapt to the hopefully temporary new operating norm.

They did all of this, while also delivering strong first quarter results with which we were very pleased.

In this next section of our prepared remarks, I'm going to briefly recap the first quarter results highlights, then turn to expanding on Joe's comments with respect to how we are managing our financial health through the current COVID-19 uncertainties.

Please refer to our earnings press release and first quarter 10-Q for more details and risk factors. For the first quarter of 2020, total revenues increased 6% to $129.5 million from $122 million a year ago.

The company's 9% operating profit increase for the quarter was driven by a $4.4 million increase in gross profit from rental revenues and $1.2 million increase in gross profit on rental-related services revenues, partly offset by a $1 million decrease in gross profit on sales revenues.

Net income increased 9% to $20.2 million from $18.4 million and earnings per diluted share increased 8% to $0.81 from $0.75. Now, I will break the results down by reviewing rental division operating results and performance compared to the first quarter of 2019.

Each of our rental divisions had minimal impact from COVID-19 pandemic during the first quarter of 2020. Mobile Modular total revenues increased $8.1 million, or 12% to $73.2 million on higher rental and rental-related services revenues partly offset by lower sales revenues.

Rental revenues for the quarter increased 12% from a year ago, which was driven by a 7% improvement in average rental rates and 5% higher average equipment on rent. Sales revenues decreased $0.7 million, or 9% on lower new equipment sales.

Rental revenue growth was healthy across our commercial and education markets as well as in our Portable Storage business. Equipment preparation costs included in other direct costs of rental operations was comparable to a year ago at $12.6 million. As a result, rental margins increased to 61% from 57%.

Average modular rental equipment for the quarter was $816 million, which was an increase of $37 million. Average fleet utilization for the first quarter decreased slightly to 78.7%. At TRS-RenTelco, total revenues increased $3.4 million, or 11% to $34.1 million on higher rental revenues, partly offset by lower sales revenues.

Rental revenues for the quarter increased 17%, primarily driven by 21% higher average equipment on rent, which was partly offset by 3% lower average rental rates. The lower average rental rates reflect a mix shift towards more general purpose equipment rentals that tend to have longer-term transactions compared to communications equipment rentals.

Rental margins decreased to 41% from 42%. We saw growth in rental revenues from both general purpose and communications test equipment. Average electronics rental equipment for the quarter was $338 million, which was an increase of $54 million. Average utilization for the first quarter increased to 65.3% from 64.3%.

At Adler Tank Rentals, total revenues decreased $2.7 million, or 12% to $20.7 million on lower rental and rental-related services revenues, which was partly offset by higher sales revenues.

Rental revenues for the quarter decreased 13%, primarily from 16% lower average equipment on rent, which was partly offset by 3% higher average monthly rental rates.

The rental revenue decrease reflected weaker demand in upstream oil and gas, which we believe also negatively impacted other market segments with five of our six end markets having lower rental revenues compared to last year's first quarter. Rental margins decreased to 55% from 58%.

Adler's average rental equipment for the quarter was $315 million, which was an increase of $2 million. Average utilization for the first quarter decreased to 47.8% from 57.3%. Moving on the remainder of my comments will be on a total company basis.

Selling and administrative expenses increased $2.3 million, or 8% to $32 million, primarily due to increased salaries and employee benefit costs. Interest expense for the first quarter 2020 was $2.7 million, a decrease of 15% as a result of 13% lower net average interest rates and 2% lower average debt levels.

The first quarter of 2020 provision for income taxes, which based on an effective tax rate of 24.3% compared to 23.9% a year earlier. Our 2020 year-to-date cash flow highlights include net cash provided by operating activities was $45.7 million, an increase of $0.8 million compared to 2019.

We invested $35.4 million for rental equipment purchases mostly at Mobile Modular and TRS-RenTelco; property, plant and equipment purchases were $3.2 million, and dividend payments to shareholders were $9.4 million.

During the quarter, the company repurchased 164,000 shares of common stock, totaling $7.9 million or an average price of $47.89 per share. These were opportunistic repurchases taking advantage of what we believe to be an attractive price range. Just over 1.4 million shares remain authorized for repurchase. There were no repurchases during 2019.

Net borrowings decreased $1.9 million to $291.5 million during the quarter. At quarter end, the company had capacity to borrow an additional $240.5 million under its lines of credit and the ratio of funded debt to the last 12 months actual adjusted EBITDA was 1.21 to 1.

First quarter 2020 Adjusted EBITDA increased 10% to $54.9 million compared to a year ago. And consolidated adjusted EBITDA margin was 42% compared to 41% a year ago. Our definition of adjusted EBITDA and a reconciliation of adjusted EBITDA to net income are included in the quarter's press release.

Turning now to expand on Joe's comments related to COVID-19. The most important financial steps we have taken to manage through the current COVID-19 uncertainty have been to secure liquidity and extend debt maturities. On April 1st, we announced the renewal of our $420 million credit facility with a syndicate of banks.

This five-year facility matures on March 31st, 2025. On April 3rd, we announced that we entered into an amended and restated $250 million note purchase and private shelf agreement with Prudential Private Capital.

The new agreement allows for the issuance of up to an additional $150 million of senior notes on terms to be determined at such time that any additional notes are issued. As Joe discussed, we have reviewed all aspects of our operations under the current COVID-19 conditions.

From a financial perspective, we are closely managing cash flows by resetting capital spending budgets to align with lower and less certain near-term demand.

While many operating costs are relatively fixed in the near term across our branch operations, our teams have reset budgets and spending priorities in order to respond to local market demand changes, while retaining operational flexibility to support many of our customers who are still working.

As we mentioned earlier, COVID-19 did not have a significant impact on first quarter results. Nevertheless, recent business trends indicate fewer new shipments of equipment as some customers delay projects. As a result, we expect near-term rental revenues to decline compared to the first quarter.

The near-term drop in rental revenues is likely to be more significant at our shorter term, higher-velocity rental operations at TRS and Adler, while the turnover of contracts and rental revenue impact at Mobile Modular is expected to be slower, given its longer rental term contracts.

The size of the reduction in rental revenues and its duration are not possible to forecast accurately at this time. Consequently, given the economic uncertainty and rapidly evolving circumstances related to the COVID-19 pandemic, we are withdrawing our previously issued 2020 guidance and not providing an updated outlook at this time.

Finally, please keep in mind, some of the important pillars in the company's financial foundation. As a 40-plus year old company, we have managed through many challenging cycles. Generally, we believe we have been more resilient to economic cycles or shocks as a result of our lower leverage capital structure.

During economic slowdowns, we typically experience healthy free cash flows as the reduction in near-term profitability is more than offset by lower capital spending needs for the business. In addition, we have achieved a 29-year history of increasing our annual dividend through prior market cycles and shocks.

Reiterating Joe's earlier reflections, we have a team and a culture that adapts quickly to new circumstances, works hard to serve customers and act smartly to maintain the company's long-term financial health.

We are proud of our team members and their responsiveness to the COVID-19 pandemic and thank all of them for persevering through the many public advisories and operational challenges. We are all in this together. That concludes the prepared remarks. Olivia, you may now open the lines for questions..

[Operator Instructions] And our first question coming from the line of Scott Schneeberger from Oppenheimer. Your line is open..

Thanks very much. Good afternoon, guys. I hope you and yours are doing well. I'll start off by - as - I can do early to [ph] hit on all the segments.

Could we discuss the education vertical and modular, just curious how you view that being affected given the timing of coronavirus and how that might affect our ramp in contracts at this point of the year? Thanks..

Sure. Hi, Scott. Thank you. Actually, we're very pleased with the activity levels in our education business. As I said in my prepared remarks, we've got some school districts who are actually accelerating the pace of them completing work that they have planned for the summer because schools are vacant right now.

Many of these projects that we're working on now had been planned and in the execution stages for a while. And school districts at this point do not - are not communicating with us about any significant delays or postponements to these projects. So we're pleased that, that part of the business appears to be on solid footing..

Thanks, Joe. Staying in the Modular segment, just curious, it sounds like you were saying no cancellations, just delays for construction projects.

Could you elaborate and just give some thoughts on how you think that may shape up?.

Sure. I wouldn't say there were no cancellations. I mean, there have been many, many fewer cancellations, then there have been delays. As things kind of unfolded back in March, those customers who have had folks not able to work in the field because those projects are deemed to be non-essential, and that varies by geography.

As an example, more in California, we've seen projects deemed to be non-essential construction project. So some of those have stopped, but not canceled, and new projects that we're hearing from folks in those areas are more just delays as opposed to we are canceling that project at this point.

So, overall, and even in areas where we are operating that, that construction is still fairly active like in Florida, as an example, we're just seeing just more delays at this point and fewer cancellations. I don't really have a numeric breakout on that, but that's the feeling that we're getting from customers in our discussions with them right now..

Thanks. And any returns, be it education or more likely construction of - I guess it's only been really a month.

But I would assume not, but are you seeing any trend of customers taking things off rent because they've come to term with the lease?.

Yes, not really. It's been relatively stable, and we haven't seen an excessive number of returns at this point..

Thanks. Just last one in this category pricing. And in fact, you will use this as a segue to the other two segments, please. Joe, are you seeing, just how is pricing being affected if at all across the segments over the last month? Thanks..

Sure. Yes, pricing is holding in there and we've not seen any significant degradation in pricing.

I would say, the one business where we've seen it more than the others has been Adler, and that's just due to the demand conditions that's been challenged for a longer period of time, and so we're seeing softer pricing there, but the other businesses is holding in there very nicely. We're pleased about that..

Great. And I guess I'll go to Adler next. You mentioned in prepared remarks, there is apparently a contagion impact from upstream, which is obviously under pressure.

How are you reacting with regard to just how you're managing your assets? Are you going to attempt to move perhaps and tanks out of the upstream oil patch and elsewhere, or just stay the course at this point based on the expense and probably the complication you're trying to do that at the moment?.

Yes, it's a fair question. We will move assets before we buy new fleet, and so that's a priority for us to do that, to reposition. And I would say at this point, we haven't re-positioned a whole lot of fleet, yet. That may happen in the future, but not so much currently..

Yes, Scott. I'd say most of the Adler markets, we've got good fleet coverage and given the way current demand conditions are somewhat softer, there's just less urgency to do that. Longer term, depending on how things might play out, we have that as an option. And just like Joe said, we'll do that ahead of putting new capital in..

Thanks, Keith. And then, I just - I know I've taken a lot of time and used up a lot of questions, so one real quick on TRS. Joe, would you be so kind just to elaborate a little bit more on - you touched the service on 5G and what you're seeing just a little bit more thought on how you think that progresses.

If this hopefully is only a short-term dynamic we're encountering, most likely I infer that, that shouldn't impact larger plans too much. But just a little more input there would be appreciated. Thanks..

Sure. Yes, absolutely. We do not think that this pandemic is going to get in the way of 5G roll-outs on a broader scale. That need for bandwidth expansion and additional capacity for folks has just it's always there. And I think as soon as shelter-in-place restrictions are lifted and things start to ease up a bit.

I think the contractor is going to be right back at work again. And we have not heard anything from the major carriers as far as there are delays on the roll-out of 5G. So, we're still very much looking forward to that picking back up as soon as things get better..

Got it. I appreciate..

And Scott, if I could just add a little bit of color. Yes, just a little bit of color from what we've been hearing anecdotally from that part of the business, and it's a great example where people had the desire and intention to do work in the field.

But during this rapidly evolving set of circumstances, groups going to tower sites, sometimes they don't have transportation where they're expected to all travel separately. When they get to a site, there are no hotels open in the region to accommodate them if they're on a multi-day project.

So when we're hearing stories of less field work, I think it's a reflection of people having to adapt to these new pandemic-related work protocols. And as they figure out how best to do that, if indeed it's possible to do it. You're seeing this hopefully temporary lower level of activity in the field..

Okay, that's interesting and helpful. Thanks, Keith. I will turn it over now guys. Thanks so much. Stay safe..

Thank you, Scott..

Thank you..

Our next question coming from the line of Sam England with Berenberg. Your line is open..

Hi, guys. Just a couple from me. The first one around the CapEx reductions that you said.

I was wondering, are you going to stay above replacement levels, do you think, or are you planning to de-fleet at all ahead of a potential recession after the lockdown?.

Keith, do you want to handle that one?.

Sure. Sam, I would say it's very fluid. Let's just start with how we started the year. We spent $35 million of gross rental equipment CapEx in the first quarter and that's basically comparable to what we did a year ago. And I think in recent weeks, as you've heard, we've been really revisiting all the capital plans.

I think under normal circumstances and our growth engines for new capital have been electronics and modulars. We have a good amount of fleet in most product categories to meet current demand, especially given the level of uncertainty in the very near term. So, when we look at the rest of the year, just to give you possible ways to think about it.

Last year, gross rental equipment purchases were just over $160 million. There are scenarios for this year, where we could spend half that amount, and we would have almost spend close to 50% of that reduced amount, even in the first quarter. But all of this is very fluid.

And if people get back to work more quickly and if we see demand recover, particularly in the electronics part of the business, then the number could move up a little bit. But also if shelter-in-place or other complications with work continue for longer, the number could be potentially lower.

But just to give you an order of magnitude, hopefully that helps..

Yes, that's great. Very helpful. Thanks. The next one, could you just talk a little bit more about the flexibility you have in the cost base.

I know you said on the call that it's mostly fixed, but could you give us an idea of what variable costs you do have that you can cut? And I suppose, looking ahead to the rest of the year, do you plan to make any significant cost reductions in Q2, or like a lot of other businesses, are you waiting to see how much longer the lockdown goes on before making any major cost-related decisions..

Yes. That's a great question. And I would say, just as you ended the question that's where our thinking is, which is we're not doing anything dramatic at this point. I think we're playing the long game, if you will. We've got good people in the organization with good teams, with good relationships with customers.

What I would characterize it as is, in our branch network we're really trying to continue to support customers. Clearly in some areas, and oftentimes this is at the smaller branches, you may have.

80% or 90% of the workload that you might have expected, and we're just absorbing that loss of productivity, if you will, we're just absorbing that with the current cost structure. Now having said that, our teams have been very thorough and are doing ongoing work to look smartly at every line item in the operating budget.

So obvious things like hiring is really not happening at present. There are one or two critical positions that are exceptions, but for the most part, we're not hiring. In some areas, we have some natural attrition and we won't immediately necessarily back-fill those positions. Clearly, things like overtime, we're not having any of that.

The other elements of our cost structure are generally tied to getting equipment ready for customers and new customer orders. And ironically, this is a busy time of year in the Modular business, particularly with the upcoming education season.

So, if you look at our operating cost, those direct costs of rental operations, I would pick that as an example where our costs are probably going to be flat to up slightly looking at the second quarter compared to the first quarter of this year and really it will depend on how busy we are at Modulars, particularly related to the education season.

And I hope we're spending dollars there because we want to do that business. I think on the SG&A side, if you were to look at a typical year, you would see the business coming out of the generally quieter, seasonally slower winter months.

And then as we move through the spring, we generally see business activity levels increasing, and you see that reflected typically in our SG&A costs increasing as you go from Q1 to Q2.

I think from what we know today, and again, it is very fluid, I think we would expect to see SG&A cost flat to declining going from first to second quarter of this year. So, hopefully that gives you a feel for how we're thinking about it, how we're still trying to manage things very tightly and supporting customers over the next few months..

That's great. Thanks. And then just one more from me.

In terms of how you're thinking about the second half of this year in returns, do you think there'll be a build-up of returns that happen when the lockdown finishes? And what sort of proportion of the business are businesses that basically shut down at the moment until the lockdown ends and what proportion are continuing to operate, just to get an idea of how the returns if they happen will be phased across the year..

Yes. Sam, that's kind of a tough one to predict at this point. Obviously, we have equipment that cycles off and that's going to come back, either on an extended process because projects have been delayed or on time. We're just not sure at this point.

And I think really - I think a lot is going to depend, more on the pace of bookings that we get in the second half of the year. And I think that's really going to determine how well the top line works as opposed to the amount of returns that we get.

I just - if bookings and returns are high, then that's a double hit, but if bookings are pretty good and returns are as expected, we should be okay. It's just a little bit hard to predict at this point..

Okay, great. Thanks very much. I'll turn it over. Thanks for taking the questions..

Our next question coming from the line of Marc Riddick with Sidoti. Your line is open..

Hi, good afternoon, gentlemen..

Hi, Marc..

Hi, Marc..

So first of all, I want to thank you for all the color and the commentary around all the segments. That certainly has been really helpful. One of the things I just wanted to start with, I wanted to touch on the strength of rental-related services in the first quarter. I was wondering - particularly in Modular.

I was wondering, if you could spend some time on that strength and maybe where that was coming from and then I have a few follow ups after that..

Sure. We have been doing some additional work at the business as an initiative to provide customers more of a rental solution as opposed to just a box that they use or just a piece of equipment.

And so what comes along with that and that's included in the rental-related services lines are things like re-rents, which could be for additional ancillary products that the customer might want with that rental, or it could be site-related service work, which could be additional electrical connections or canopies or walkways or things like that, that customers also want with their buildings.

And so that falls into that rental-related services line, and we've been doing more of that business as each quarter progresses. And so you're seeing some of those services mixed in there..

Okay. So it's more additional services as opposed to pricing of deliveries, or things in that nature..

Correct..

Okay. That's helpful..

Yes. Just to help you with those line items. I'm going to make it very simple. In a business like Adler, when we make a delivery or when we make a pickup, we recognize the revenue at the time that work is done. So you're seeing that read through in the financials. And then in the Modular business, you've really got the two things.

You've got delivery and install and then dismantle and return delivery. It really tracks over time somewhat in line with the rental revenue activity, but layered on top of that are these site-related services that Joe referenced and they're a little bit more lumpy and they're episodic.

I mean the quarter they happen in, we get paid the work gets done and we move on. So, that's just a way for you to sort of think about it. I wouldn't necessarily bank on the uptick we saw from - we did have one particularly notable site-related services project in the first quarter.

We may or may not get similar to that in future quarters, less than or more than. It's a little bit lumpy, but it's layered on top of the underlying delivery and set up and then the dismantling return..

Okay, that's very helpful. Thank you.

I was wondering, if you could spend a little time touching on maybe what you've seen with Portable Storage and maybe some of the trends that you're experiencing there?.

Sure. The business has been performing well. We expanded into some new markets at the end of last year. And our rental revenues have been increasing nicely there. I believe we were up 12% in the first quarter, and so that business has been operating very nicely for us..

And where are we as far as percentage of revenue now for just Portable Storage?.

It's still around 8%. It's below the 10%..

So, about 8%?.

8%..

Okay, great. So wondering if it's - you had mentioned at the beginning of your remarks about some of the needs to make some changes on protocols for safety.

And I was wondering if you could touch on maybe a couple of the key ones there and how that ended up being brought to fruition over throughout the fleet?.

Sure.

Well, I'm assuming you're referring to how we're handling employees during this timeframe, is that correct?.

I believe so. I think you made some mention of changes of operating protocols. I just wanted to - I just had that jotted down. I wasn't sure if I got that right..

Got it, got it. Okay. Yes. So let me give you an example. So in our inventory centers where we produce our modular buildings, we maintain them and get them ready for the next rental. As an example we've staggered shifts to allow for greater social distancing. We've closed our lunch rooms. We've decreased the number of meetings that we have.

We've provided cleaning materials for tools, so that there's not a transfer of potential germs and things like that. So these are all changes that we made to protect our employees and have them operate safely under the new requirements.

And so, it's been some change, and our folks have really adapted very nicely, and we're getting very nice work output from those facilities..

Okay, great. And then, I guess last one for me. Keith, I was wondering, you made mention on tax rate being - it seemed that was a little lower than I was expecting.

I was wondering if you could give a - well, granted as far as full year guidance was, but I was wondering if you had any thoughts on where tax rates might be headed for you throughout the course of the year. Thanks..

Yes. From a planning point of view, I'd plan in or around 26% this year. What you're seeing from time-to- time and we did see some of this in the first quarter is the accounting for equity compensation. We occasionally get a tax benefit there that reduces the effective rate. And that was something we witnessed in the first quarter of this year.

Given some of the turmoil in the equity markets, we may or may not see any of that going forward. And in fact with the accounting rules that can either help or hurt your tax rate at the margin.

So, I would say just as a planning number for the balance of the year, somewhere in the 26% neighborhood is probably as good a guess as any of us would have at this point..

Okay, great. Thank you very much, gentlemen..

Thank you, Marc..

Thank you..

Ladies and gentlemen, that appears to be the last question. Let me now turn the call back over to Mr. Hanna for any closing remarks..

I'd like to thank everyone for joining us on the call today and for your continuing interest in our company. We wish you all health and safety in the months ahead, and we look forward to speaking with you again in late July to review our second quarter results..

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may all disconnect..