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Please stand by. Your meeting is about to begin. Ladies and gentlemen, thank you for standing by. Welcome to the McGrath RentCorp second quarter 2026 earnings call. At this time, all conference participants are in a listen-only mode. Later, we will conduct a question-and-answer session. At that time, if you have a question, you will need to press the star key followed by the one key on your telephone. This conference call is being recorded today, Wednesday, July 29th, 2026. 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 relating to the company's expectations, strategies, prospects, backlog, or targets. These forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties that could cause our actual results to differ materially from those projected. Important factors that could cause actual results to differ materially from the company's expectations are disclosed under Risk Factors in the company's Form 10-K and other SEC filings. Forward-looking statements are made only as of the date hereof. Except 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 8K and its Form 10Q for the quarter ended June 30, 2026. Speaking today will be Phil Hawkins, Chief Executive Officer, and Keith Pratt, Chief Financial Officer. I will now turn the call over to Mr. Hawkins. Go ahead, sir.

Thank you, Chloe. Good afternoon, everyone, and thank you for joining us today for McGrath RentCorp's second quarter 2026 earnings call. I am glad to be here to report on our performance over the past quarter and to provide an update on our outlook for this year. I will discuss current market demand conditions and share our progress on strategic growth initiatives. First, our quarterly results. We were pleased to see rental operations revenues up 6% year-over-year, driven by continued momentum in our two largest rental businesses. Both Mobile Modular and TRS Rentalco grew rental revenues and improved utilization sequentially during the quarter. Offsetting these positive rental operations results were lower new equipment sales at EnviroPlex and Mobile Modular, and several projects pushed to the second half of the year. As a result, total company revenues decreased 6% and adjusted EBITDA decreased 4%. Focusing first on mobile modular, we saw growing momentum in our rental operations. Rental revenues grew 2% in the quarter and bookings increased 11% compared to a year ago. While demand conditions remain mixed, our larger commercial project opportunities continue to be strong. Thank you for joining us. and we ended the quarter with more units on rent than at the beginning of the year. With this inflection and higher year over year bookings in the first half of 2026, I feel positive about the outlook for the second half of this year. Our services expansion initiatives also have solid momentum. Mobile modular plus revenues were up 15% year over year. Site-related services revenues, while down slightly from the quarter, were higher for the first half. Looking at the market for new modular sales, overall demand and pipeline activity remained stable and similar to last year. Turning to our portable storage business, rental revenues were flat. We continue to see challenging demand conditions in local commercial construction markets, which are a larger component of the mix for this business. Our team remains focused on getting more units out on rent through expanding sales coverage and targeting adjacent geographic markets. Lastly, turning to TRS, rental revenues continued their impressive growth trajectory and were up 17%. Demand remained healthy across several key end markets, including data centers, aerospace and defense, and semiconductors. Our team is executing well in a strong market environment and is entering the second half of the year with solid momentum in the business. Summing up, across the McGrath businesses, we delivered rental operations revenue growth in a mixed demand environment. I am pleased with our momentum going into the second half of the year. Our modular geographic and services expansion initiatives are providing us with several growth opportunities that are not dependent on recovery in the non-residential construction market. and our strong balance sheet gives us the flexibility to fund organic growth, support a steadily increasing dividend and retain capacity for strategic M&A and share repurchases. I would like to thank our team for your dedication, deep expertise and customer engagement that are truly competitive differentiators and our customers and shareholders for your trust and investment in our company. With that, I will turn the call over to Keith. We'll take you through the financial details of our quarter and our updated outlook for the full year.

Thank you, Phil, and good afternoon, everyone. As Phil highlighted, second quarter results reflected continuing growth in rental operations revenue, offset by lower sales revenue at EnviroPlex and Mobile Modular. Total revenues decreased 6% to $221 million and adjusted EBITDA decreased 4% to $83 million. Reviewing Mobile Modular's operating performance as compared to the second quarter of 2025, total revenues for Mobile Modular decreased 4% to $150 million and adjusted EBITDA decreased 4% to $51 million. Rental operations showed steady progress and saw 2% higher rental revenues driven by growth from our commercial customer base and 8% higher rental-related services revenues. Inventory center costs increased by $2.1 million as we invested to prepare equipment to meet stronger demand and higher shipment levels in the second half. This expense compressed rental margins to 55%, down from 58% a year ago. Sales revenues decreased $9.3 million to $31.2 million, primarily due to lower new sales projects during the quarter, as several projects shifted to the second half of the year. Average fleet utilization was 70.1%, concurred to 73.7% a year ago. Utilization modestly improved from 70% in the first quarter and ended the second quarter at 70.6% as shipments exceeded returns during the quarter. While these were small incremental changes, we viewed them as positive indicators as we returned to growth in units on rent. Revenue per unit trends were favorable. Second quarter monthly revenue per unit on rent increased 7% to $902. For new shipments over the last 12 months, the average monthly revenue per unit increased 7% to $1,252. There is still a positive pricing tailwind opportunity as our fleet churns. We continue to make progress with our modular services offerings. Mobile Modular Plus revenues increased to $10.5 million from $9.2 million a year earlier. Site-related services revenues were $6 million, compared to $6.5 million in the prior year, but remained above $20.25 on a year-to-date basis. Turning to the review of portable storage. Total revenues for portable storage increased 1% to $24 million, and adjusted EBITDA was $8 million, a decrease of 23% compared to the prior year. Rental revenues were $17 million, flat compared to last year, and rental margins were 80%, down from 83% a year earlier. As Phil mentioned, demand conditions in small, local commercial construction markets remain challenging. Adjusted EBITDA was impacted by higher fleet preparation costs, pressure on rental-related services margins in a competitive environment, and investments in sales coverage to support future growth. Average utilization for the quarter is 58.3%, compared to 61.1% a year ago. Turning now to the review of TRS Rentelco, TRS delivered another strong quarter, with total revenues up 17% to $43 million and adjusted EBITDA up 29% to $25 million. Rental revenues increased 17% to $32 million, benefiting from improved demand conditions, including projects supporting data center build-ups. Rental margins improved to 48% from 44% a year ago. Average utilization for the quarter was 68.1%, up from 64.8% a year ago. PRS utilization ended the quarter at 68.9%, our highest utilization level since the first quarter of 2021. Sales revenues increased 13% to $8.7 million and gross margins were 66% compared to 47% a year ago. Lastly, on EnviroPlex, compared to a very strong second quarter in 2025, EnviroPlex total sales revenue decreased to $4.6 million from $19.9 million. and adjusted EBITDA declined to a loss of 0.5 million from a profit of 4.3 million. The decline was primarily driven by project timing with several project completions shifting to the second half of the year. The remainder of my comments will be on a total company basis. Second quarter selling and administrative expenses increased 2.9 million. to $56.4 million, primarily due to investments to support our modular geographic expansion. Interest expense was $7.1 million, a decrease of $0.7 million as a result of lower interest rates during the quarter. The second quarter provision for income taxes is based on an effective tax rate of 27% compared to 27.3% a year earlier. Turning to our year-to-date cash flow highlights, net cash provided by operating activities was $106 million compared to $110 million last year. Rental equipment purchases were $124 million compared to $50 million last year as we increased investment in modular geographic expansion opportunities and to support higher demand at TRS. In addition to investments in new fleet, healthy cash generation allowed us to pay $25 million in shareholder dividends and to complete $27 million of share repurchases. At quarter end, we had net borrowings of $590 million, and the ratio of funded debt to the last 12 months' actual adjusted EBITDA was 1.65 to 1. Lastly, we are updating our outlook for 2026. The midpoints for our revenue and adjusted EBITDA ranges are unchanged, while we tightened up the ranges now that we are halfway through the year. We have also increased our gross rental equipment CapEx to support incremental investment in TRS. Relative to our original outlook, We continue to expect strength in the modular business. Stronger than expected performance at TRS should offset weaker performance at portable storage. And at EnviroPlex, we continue to expect performance to be similar to 2024. We now expect total revenue between $955 and $985 million adjusted EBITDA between $363 and $375 million, and gross rental equipment capital expenditures between $200 and $220 million. As we enter the second half of the year, our focus remains on disciplined execution, prudent capital allocation, and delivering long-term shareholder value. That concludes our prepared remarks. Clearly, you may not open the lines for questions.

Thank you. The floor is now open for questions. At this time, if you have a question or comment, please press star 1 on your telephone keypad. If at any point your question is answered, you may remove yourself from the queue by pressing star 2. Again, we ask that you pick up your handset when posing your questions to provide optimal sound quality. Thank you. Our first question is coming from Manav Patnak with Barclays. Your line is open.

Hi, this is Ronan Kennedy. I'm from Manav. Thank you for taking our questions. You noted shipment succeeded returns in each month of the quarter. Could you provide some color and see the extent to which that was driven primarily by large commercial projects and specific end markets? versus the regional expansion efforts or broader improvement across the customer base. Also interested in your comments as to whether that trend has continued into July. And a final part to the question, if I may, if not mistaken, I think Phil had mentioned inflection. So curious as to how you would characterize it. Is this the long-awaited inflection, utilization? Are we in the recovery? And your thoughts there.

Sure, and I'll start there and then Keith can weigh in a little bit. Starting with the utilization trend, I'm excited about the sequential utilization improvement that we've had in modulars here in the second quarter. As we mentioned, that's the first time in four years. It's really being driven by more mega project wins, as you mentioned, commercial. and a combination of that with our geographic expansion initiative. So that's giving a nice lift to our commercial utilization and partially offsetting some of their returns on the education side. Kind of jumping to your inflection, I think we feel good that kind of the trend's changed. We may not see this move up every single quarter consistently, but we do believe we've turned the corner on the trend on the modular side and have strong momentum entering the second half of the year. Keith, anything you'd like to add there?

Yeah, again, we'd emphasize these are very encouraging signs, but they're just the beginning of a turn. I think Phil is spot on with saying we want to build on this, but it's small shifts, and we hope to build on that as we go forward. I don't think it'll necessarily be linear every single month, but it's definitely a shift in the trend that we've seen over a number of quarters and over a number of years.

got it thank you and then obviously continued weakness within portable storage and what is it you know beyond the end market weakness and the bifurcation in the market that is consistently being spoken to by your peers and reflected in industry data is there anything else beyond end market weaknesses or certain things happening in certain geographies or exposures competitive dynamics and then are there leading indicators we can look to to suggest perhaps it improves in 27 versus remaining stuck in the current demand dynamics. Sure.

I think the consistent themes for portable storage are all around that smaller local market project dynamic that we've been talking about for several quarters and combined with industry utilization being lower so a highly competitive market lots of people trying to get units out on rent so nothing's changed there there's not any regional dynamics or differences that i would call out as material it's really those two macro themes and i think you're really talking about needing improvement in the non-residential construction Thank you. And then can you remind us if you have either characterized or provided color around your exposure to those large long-duration projects, whether it be mega and also data center specific? Yeah, we haven't quantified that, Verona, but I think what I would say there is they're a meaningful part of our new business volume, and the bookings there, as we've talked about, have remained strong. The thing I like to highlight is those projects really play directly to our strengths, the deep experience of our team, capabilities of our operating infrastructure, and the scale of our modular solutions offerings. There's only very few competitors that can bring all that together in the way we can. The other opportunity with those mega projects, data centers in particular, it's an opportunity to bring all of our rental products to that site. So got everything from modular buildings, modular kitchens, dormitories, and electronic test equipment in the case of data centers. So it's an important, meaningful part of the new business, small in the scale of the overall fleet and revenue mix. Keith, anything you want to add there?

Yeah, I think that's a good summary. And Ronan, as we track the data, you'll see in our IR pack, we've got a good view of the different end markets that we serve. We just don't have mega projects or even data centers as an identified item. Sometimes it's captured in our Thank you. If I may, I'll finish with a

Question, but a multi-parter, on the sales decline. Are you helping with how to think how much of that was the EnviroPlex versus the mobile modular? And then I think you indicated it was primarily due to lower-use sales and several modular sales transactions that were expected in the year shifted into the second half. So any further color or context on the drivers there? And then what gives you confidence in that timing shift? Is there anything to read through with regards to broader demand is it sales activity tends to be more sensitive to project timing, customer capex, decisions in rental, anything you have to be mindful of for the context of that sale of the client?

Sure, absolutely. I'll jump in and sort of get the topic started. Really what we ran into are things that we often see in this part of the business. And these are new sales projects at EnviroPlex or on the modular side of the business. And frequently we'll run into site readiness issues. This could be the customer has to get a permit. It could be they're dealing with issues that have to be completed before we start, like foundation work, things like that. And then at the end of a project, there are also other things that have to be done before we complete the project. An example would be the local utility project. putting a power hookup at the site. So these are things we went into. I would say when we looked at this quarter, we had several of those that impacted projects that were a little larger and caused them to shift. In some cases, the shift is just a matter of weeks, in others it's several months. But these are all projects that we have under contract. We're going to complete them. And I think the cadence by quarter was maybe a little different from what we've seen in the past and a little bit different maybe from what we expected. But nothing highly unusual in terms of the factors that caused the delays. That would be the sort of overall comment. Phil, I don't know if there's anything you'd like to add.

I think you described it well. Maybe I'll just add these aren't projects canceling and falling out of the pipeline, just completion dates shifting from when we originally expected it. There's really nothing in the underlying market demand that we're worried about. We really see that as being solid, consistent with where it was a year ago. I'm sure just the size and scope of these sale projects that sometimes are difficult to predict given things outside of our scope on the site.

We did foreshadow, Ronan, that EnviroPlex would have a lower sales year. We commented on that back in February. And again, just to calibrate things, EnviroPlex had a very strong revenue year in 2025. They had $57 million in revenue. We commented we thought this year would be much closer to 2024 when they did 46. We've still got that same view. If you look year to date, we just haven't recognized a lot of those sales. For EnviroPlex, we've recognized 8 million year to date. A year ago, it was 27 million year to date. So a big part of the difference this year is the timing around those EnviroPlex sales. There will be less of them for the full year, and they're definitely more weighted to the second half. and Dan with Modulars. Sort of similar comments, but not as big of a shift in the numbers.

Got it. Thank you very much, both of you, for all of that. Greatly appreciate it. I'll pass it on now. Thank you.

We'll take our next question from Scott Schneeberger with Oppenheimer. Your line is open.

Thank you. Good afternoon. I think I'll start in mobile modular in rental. Your slide 33, always one of attention for pricing. It looks like you have a spread of 39% from total portfolio on rent versus 12 months of modules on rent. So still very, very strong on that spread. Could you speak to that and to the spot pricing and maybe differentiate large and small projects in that offense?

Scott, I'll jump in and take a crack at it. I think you're correct with the observations. There's still a good spread between the average revenue per unit on rent and then what we're seeing with shipments over the last 12 months. We view that as a good thing for the business, a sort of positive tailwind over time. A couple of things at play. I would say spot pricing, it kind of varies around the country. It varies by type of product. It varies by length of contract. All these things go into the mix. It's a fairly complicated algorithm when you look at understanding pricing at a very granular level. Thank you for joining us. The services piece is really something we've been working to grow over the last few years, and that's giving us more revenue opportunity per unit. We're being successful in achieving that with the new shipments, and it's gradually working its way into the installed bids of rental units. So all those trends are things we've seen for many quarters, and they continue to be healthy, and we're very pleased about that. I don't think there's anything unusual regarding megaproject or small local markets. There are dynamics around terms, size of project that can influence how we view the pricing that's appropriate, but those are all normal things we and I think others take into consideration when they look at new business.

Okay, thanks. Appreciate that. I'm going to crack the TRS. I'm sorry. Phil, were you saying something?

No, go ahead Scott.

I think so. Yeah, I want to go over and dig into TRS because, you know, I think we saw acceleration from low teams now into high teams year over year, and that's against a tough comp around revenue growth. So very impressive to see. I think if you could just elaborate on the trends there, the sustainability of the trends, and, you know, a little bit of extra capex in that business scenario. Yeah, I'm happy to answer that, Scott.

We really see that demand remaining strong across several end markets and there's no immediate sign of slowing. Data centers remain a meaningful contributor to that growth. It feels like we're still in the early to mid-innings of that data center build-out. Thank you for joining us. Thank you for joining us.

Good last point there and certainly a nice opportunity for you long term. I'll just do one more. You've been buying back stock first quarter, second quarter at a decent clip. Just curious the rationale of Buybacks and in consideration for M&A, obviously you're doing your geographical build-out with investment, which can impact margins. You can kind of bypass that on successful acquisitions. So just kind of curious on the strategy of the continued geographic expansion, organic versus M&A, and then just a little comment on buybacks. Thanks.

Keith, do you want to start with mine, and then I'll talk about geographic expansion in NNA?

Okay, yeah, Scott, it's an important topic and one that we're frequently reviewing, which is capital allocation opportunities and which we should fund. I think the good news is leverage at 1.65 at the end of June. We have a lot of flexibility, and we still want to be prudent. You're seeing the focus on organic investment. We have good opportunities at Modulars and TRS and we're funding them. And at the same time, trying to manage utilization very carefully, but still in light of market conditions, it's obviously a different story in each line of business. So that's the first comment. We did one small tuck-in. You may recall we commented on it on the April call. That deal was closed back on April 1st. We're going to continue to work the pipeline so we can elaborate on that. And then we look at the buyback as another tool in the toolkit. We don't telegraph how much and when, but we've now purchased shares both in the first and second quarter. We've purchased a total of 250,000 shares year to date, and we're in a position to do more. Our authorization... Thank you for joining us.

I'll just add, relative to geographic expansion, we're executing well there. You can see that in the rental momentum that we have. That's one of the drivers of that. We do that primarily organically through CapEx, as Keith mentioned, but we are able to use smart M&A as an accelerator. The acquisition that we closed, the quarters were an example of that, where We expanded our reach into the Midwest with a small tuck-in modular acquisition. So it provides us additional density, a facility that we can leverage to further scale in that part of the country. And we'll be able to add value to the existing customer base by providing those modular plus services that weren't being offered previously, as well as expanding from that kind of commercial construction customer base to adding classrooms for the storage, and the larger commercial complexes, product offerings that they didn't have in their toolkit. So we have an active pipeline of those types and other types of opportunities and we work that regularly and we're good about where we're at in that process.

Sounds good. Thank you both.

Thank you. Thanks, Scott.

We'll take our next question from Daniel Moore with CJS Securities. Your line is open.

Thank you. Good afternoon, Phil, Keith, for all the color and taking questions. Wanted to just go back to Enviroplex. Curious if any of those delayed sales have now been executed. And your prior comments would imply, based on what we've seen in H1, that H2, I think, would be up slightly year over year. Just curious of your expectations for sales, you know, kind of Q3 and then the remainder of the year there.

Yeah, I would say, as I mentioned a moment ago, some of those delays, I think it's a matter of weeks, others a few months. But those are, in the case of EnviroPlex, those are all contracted projects. And usually when a customer has decided to do something on the construction side, they actually want to get it done as quickly as possible. Thank you for joining us. I don't want to really get into handicapping how much in Q3 versus Q4. Several of the things that were a little late to finish in the second quarter, it is a matter of moving from June to July, but there's other projects that take a little longer to get completed. So I would say EnviroPlex is likely to have a very strong second half, whether some of those Projects are completed in Q3 versus Q4. I want to be a little careful about pinning a sign on that, but most likely both quarters will show healthy and barflex sales.

Very helpful. And then I'm curious just from a sort of – we've talked about large customers versus smaller geographies, but just looking from a geographic perspective, any regions that are I'll take that, David.

Right to start is obviously we have more strength where we're entering the market, new to the market, didn't have fleet. We're able to participate in all the opportunities there. We're not depending on market growth. We're able to grow even though the overall construction market may be contracting a little bit from a square footage standpoint. So those geographies that we talked about where we're small and growing, Pacific Northwest, Midwest, Northeast, Thank you for joining us. As the new geographic markets, we just have much more inventory to deploy and we're more impacted by the slowdown in those smaller local construction projects. But there's no markets that I would call out where we're extremely strong in one region of the country versus another. The exception would be obviously wherever you see these large data centers. Thank you very much.

You touched on it in the prepared remarks, but to give a little bit more color update on the traction, you're seeing both mobile modular plus as well as site-related services. How do we think about incremental growth you can generate from both of those relative to the market over the next two, three, five years?

I think we're happy with the penetration that we're getting there. We talked about the quarter-over-quarter growth rate, particularly in Mobile Modular Plus still being strong and our cumulative growth rates in both those initiatives continue to be strong. So we feel good about our ability to continue to penetrate with the existing offerings. Thank you for joining us. services and offerings to that mobile modular plus lineup that give us more ways to add value to the customer and increase revenue to the order so more recently you've seen things like cell phone service janitorial services air care filter replacement type program programs that are adding those capabilities so we see see lots of opportunities still opportunity to move the needle on penetration and still opportunity to move the needle on services that we're offering And then if you think back to Keith's question, Keith talked about just on the pricing churn over time. Think about that opportunity to add those services happening over a similar time frame, right? Multi-year as the fleet churns and things that have been out on rent for three, four, five years come back and we're able to get those back out on rent with a new level of service offerings.

All right. Appreciate the call there again.

Thank you, appreciate the questions.

We'll take our next question from Stephen Ramsey with Thompson Research Group. Your line is open.

Hi, good evening. Here a bit more on modular shipments exceeding returns. Definitely good to see that. Maybe talk to how much of that is less units coming in versus more going out. Do you feel like the returns headwind is behind you or at least sloping in the right direction?

Yeah, I don't think it takes both sides of the equation, right? The shipments need to be growing and returns bigger. So I think we've seen a little bit of both. Historically, we talked about, if you think back three-ish years ago, peak construction markets. Thank you for joining us. and then we've got a trend here that's gonna give us some solid momentum going forward.

Okay, that's great. On PRS, it's been talked about how good the results were. and utilization hitting very high levels and it looks like raising CapEx. Do you feel like the high utilization constrained the results that you potentially could have put up? And then this larger equipment base, is it contributing meaningfully in the second half or is this something that it rolls into the second half and helps 2027?

All good comments, Stephen. A couple of things. First of all, I don't think we were constrained in the second quarter. We've got a really good team. They're just very nimble in how they react to market opportunities. They've been doing a remarkable job here for many quarters of capitalizing on a healthy demand environment and at the same time managing the fleet assets. Thank you very much. Thank you for joining us. Thank you for joining us. But that's the way I talk about it. This is a high-velocity business, and we have the team and the systems to manage that business very effectively.

Okay, that's all great. And then one last one for me, sticking to TRS. Can you talk about pricing and how, if that's a positive for 2026, and maybe just put into context I'll take that one, Steven.

I think pricing in the TRS world is very disciplined. It's typically a pretty tight range around percent of lists. The possible lift that can come is in a high-demand buyer like this where manufacturers are increasing list prices. That could give opportunities for a little bit of pricing improvement as list price of equipment goes up. We compete on price. We have to be in the zone. But this is not as dynamic a pricing environment as you see in our other businesses. Keith, anything else you'd like to add there? No, thank you.

Yeah, I'll just point out, Stephen, you've probably seen we've got what we call the rate factor. That's a defined term we've provided across each of our rental segments. That rate factor was up nicely at TRS Rentalco, 4.52 compared to 4.22 a year ago. However, the primary reason for the increase is just the mix of business that we're doing. Essentially, it's shifting a little bit more towards the communications side. Those communications products in general have a shorter, useful life. So when we look at the cash we have to receive, it's a higher amount of cash per month. Thank you both. Thank you.

Once again, if you do have a question, you may press star one on your telephone keypad at this time. We'll move next to Mark Riddick with Sidoti. Your line is open.

Hi, good evening.

Hi, Mark.

So, Keith, I really appreciated the tail end of the commentary there around the mix that sort of delves into sort of where I was going to initially go with one of my questions. But the TRS utilization commentary, it certainly seems to have indicated it was going through the quarter sequentially, I guess, and monthly, what have you. Is there sort of a general thought as to comfort levels as to, and not necessarily a feeling, but maybe sort of talk a little bit about comfort levels of utilization within TRS and then I have a follow-up.

Again, we try to manage that very carefully, balancing having equipment available for customers for the next order versus high utilization and strong return on invested capital. Those are things we're always calibrating in the business. I think we're comfortable where we are, but we're absolutely at that point where it makes sense to add more capital in certain product categories where the demand is strong. And our view is that strength will continue for many months. So that's where we're at. And again, we've got a good team. They look at it very closely. This business has a lot of skis, so there are a lot of different items involved. Thank you for joining us.

Great, and then I know there's been a lot of questions, and I really appreciate all the color that you've already provided. Maybe one of the things you didn't touch on much is on education. Maybe you can sort of give us a bit of an update as to what you're seeing there as to activity levels and projects maybe relative to historicals, as well as how you're feeling about funding environments and key markets there.

Thanks, Mark. Appreciate the question. The national level education drivers are characterized as neutral. You've got decreasing public school enrollment that we've been talking about being offset by increasing modernization opportunities and our geographic expansion efforts are entering into new markets. We have classroom opportunities. When we look at 2026, our education bookings were not as strong as they were last year. When we continue to view education as an attractive long-term vertical, like our market position there, it just isn't likely to be the growth driver for us in the near term, right? That's all coming from the commercial side of the business, and that's more than offsetting what we're seeing on the education side.

Okay, great. And then I know you touched a little bit on this as to the acquisition, the smaller acquisition earlier in the year. Maybe you could touch a bit on just general views as to maybe what you're seeing out there currently, valuation levels, and how the pipeline looks as far as levels of attractiveness at this point.

I can take this. I think there's plenty of opportunities out there. What we always talk about is the three things that need to align. You need a willing seller, you need high-quality assets and business, and you need the right valuation. And the three of those things don't line up in our world incredibly often. And you see that kind of in our history. But we have an active pipeline of opportunities of all shapes and sizes that we're regularly working and meeting with. We believe we're a buyer of choice, an attractive acquirer, but again, you need all those three things to line up. We're not in a hurry. We're glad to grow organically and proven we can do that in all of our markets and where we find the right opportunity, it's a nice accelerator for us. Nothing's changed there. Good pipeline, good process. We've got the right playbooks around that, but we're not dependent on it.

Great, thank you very much.

Thank you.

There appears to be no other questions. This concludes the Q&A portion of today's call. I would now like to turn the floor over to Mr. Hawkins for closing remarks.

I'd like to thank everyone for joining us on the call today and for your continuing interest in our company. We look forward to speaking with you again in late October to review our third quarter results.

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