Construction Site Modular Building Companies

[Saluki]

I'm going to look at some companies over the weekend that provide structures to construction sites.  There is a company in Canada, Black Diamond that leases modular temporary housing for people in the oil and gas or mining industries, and there are some in the US, Willscot and McGrath that rent those offices and storage buildings on construction sites.  

 

Does anyone know of other company names besides the ones I just mentioned that might be worth looking at?  Also, I noticed in a power point presentation for one of the companies that the terminal value of the assets is about 50% of the initial cost.  Does anyone know who buys these assets when they are too old to refurbished and re-rented to a new customer?  Is it like an office printer or a car lease, where you get to buy it after X number of years of renting, or do they sell them to another company that rents the same product put at a lower price point?  

[dwy000]

I suspect there will be significant overlap with rail car leasing companies (like GATX and Greenbriar) since they are interchangeable, modular leasing units. 

[Spekulatius]

It seems that these companies just rent out their balance sheet. I think there is more differentiation with equipment rentals.

[Saluki]

On 11/29/2024 at 2:24 PM, Spekulatius said:

It seems that these companies just rent out their balance sheet. I think there is more differentiation with equipment rentals.

 

Yes, with rail companies and airplane leasing and even shipping it seems like a way to keep stuff off your balance sheet but this stuff is different.  For instance the oil and gas people probably just want to focus on drilling and managing the crew living quarters and food is either a distraction for the company or a dead end for an up and coming manager , so I can see why they would hire a company like Black Diamond or whatever that company that Fairfax owns. 

 

With the modular stuff like McGrath and Willscot, it seems more like a quarry business where there are regional oligopolies and you won't have any competition from companies beyond a certain radius.

 

I'll probably do a separate post for each one the investors board, but my 10,000 foot view seems like McGrath is the lesser of the two companies and they got $180mm breakup fee when the merger fell through but if you look at the earnings without that it's not a bargain. 

 

willscot is buying back shares and checks a lot of boxes for other positive things, but the price is higher than I'd like to pay, so it's a difficult thing, but id like to get knowledgeable about a few of them so that if they become cheap I can make a decision quickly.