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Mobile Mini (NASDAQ:MINI)
Q1 2018 Earnings Conference Call
April 20, 2018 12:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, everyone, and welcome to Mobile Mini 2018 first-quarter conference call. At this time, I would like to inform you that this conference is being recorded and that all participants are currently in a listen-only mode. There is also a presentation that accompanies this conference call, which you can access at Mobile Mini's Website at www.mobilemini.com. It is on the Investors page.Before turning the call over to Erik Olsson, Mobile Mini's president and chief executive officer, I will read the safe harbor statement before the presentation and the comments begin.

Mobile Mini would like to remind you that some of the statements and responses to your questions in this conference call may include forward-looking statements. As such, they are subject to future events and uncertainties that could cause our actual results to differ materially from these statements. Any forward-looking statements should be considered in conjunction with the cautionary statements in our press release and the risk factors included in our filings with the SEC, which Mobile Mini encourages you to read. In addition, please refer to the Investors section of Mobile Mini's Website to find additional disclosures and reconciliations of non-GAAP financial measures that will be used on today's call.Now, I will turn the call over to Erik Olsson.

Erik Olsson -- President and Chief Executive Officer

Good morning, everyone, and welcome to Mobile Mini's first-quarter 2018 conference call. I am Erik Olsson, Mobile Mini's president and CEO, and with me is Van Welch, our executive vice president and CFO. I will review the operational highlights of the quarter and the current business environment, and Van will discuss the Q1 financials. We will then open up the call to questions, and we encourage you to review the full quarterly deck providing more detailed results for your reference, which has been posted to our website as usual.Now, let me begin by saying that I'm very, very pleased with our Q1 results, which were very strong for both our business segments.

Continuing the momentum built in the second half of 2017 and consistent with the strategy and initiatives that we have put in place over the last few years. tank and pump solutions had an outstanding quarter, with rental revenues up $25.5 million, a 21.7% increase over Q1 '17. Q1 is typically the seasonally slowest quarter but we kept the momentum from Q4 and we are now heading into spring and summer, which are traditionally the highest-activity quarters for tank and pump and our pipeline looks very robust. Demand is strong across all geographies and our growth has been broad-based in terms of M [ph] segments.Our strategy includes solidifying relationships with our large downstream customers.

And in the tank and pump segment, just over 50% of our rental revenue is generated through our national accounts customers, many of whom we have multiyear agreements with. During the quarter, we signed new MSA with a large tank-and-pump customer to be the preferred provider. While we have previously conducted business with this customer, the new contract creates a more formal relationship and we expect to gain additional wallet share as a result. In addition, we are beginning to see the incremental revenue related to the five new contracts we entered into in the second half of 2017, which we have reported on previously.

And while the new contracts contributed nominally in Q1 2018, we expect that the business to increase meaningfully over the remainder of the year.Storage solutions rental revenues were up solid 11.5% in constant currency and we are particularly pleased with the 14.6% growth in North America. Large national accounts have seen the value that our unique systems, national footprint, and outstanding products and services offer. Our very strong seasonal business provided a natural bridge for large retailer remodel projects that are currently under way. In Q1 national accounts comprised approximately 33% of our total storage solutions revenue.

Based on our performance and our current pipeline, we expect that our top-line growth will exceed our evergreen model for 2018, leading to increased adjusted EBITDA and a very healthy flow-through.The economic environment for our U.S. end markets was positive and solid for the quarter. Business in the U.S. represents approximately 85% of our consolidated rental revenues.

Overall, U.S. GDP remains strong, with forecasted 2018 growth of approximately 3%. Construction is forecasted to continue healthy growth and retail activity is expected to remain stable. The industrial segment has improved and is trending in a positive direction.

Oil prices are also trending higher, approaching $70 a barrel, while rig count is at the highest levels since 2015 and are forecasted to exceed 1,000 in the second quarter. So overall a very healthy U.S. environment in the quarter, which is also expected to continue throughout 2018. Outlook in the U.K., which represents approximately 15% of our total rental revenues, remains uncertain due to BREXIT.

However, our business has been stable and so is our outlook.As you can see from the pie chart on Slide 5, we have a very balanced end-market mix. We expect growth in all our North American end markets, including our retail business, where remodeling activity has had an uptick so far in 2018, and we continue to take market share. I'd like a minute to talk about our Net Promoter and Customer Effort Scores, which provide management insight into overall customer loyalty and sentiments. Here at Mobile Mini, we place a lot of focus on our branch and regions force.

One of the reasons that we've placed so much emphasis on these metrics is that we have found a high correlation between customer loyalty brand scores and their ability to grow profitably. Locations that have high NPS and CES scores is usually well-run with stable, efficient processes.I believe that our consolidated scores are indicative of our ability to grow profitability as a company. As you can see on Slide 6, our consolidated NPS scores have consistently been about 80% for the last two years and 86% in the first quarter of 2018. These are world-class numbers, no matter what the industry or company you compare to.

CES service measures the ease of our customers' experience with us and is generally sent after specific interactions with our customer service functions. CES scores can help us identify pain points for our customers. By understanding and resolving issues that are important to our customers, we ultimately earn customer loyalty. On a scale of 1 to 10, our score in Q1 2018 was 9.3.

The Net Promoter Score and the Customer Effort Score are key pieces of our premier provider strategy. With few exceptions, these are accurate internal indicators to determine the ultimate success of a branch.We also continue to receive positive feedback from our customers around our digital transformation, including MM Connect, our 24/7 customer portal. In addition to raising customer satisfaction with 24/7 self-service account management, MM Connect is also driving reductions in paper invoicing, customer service calls, and manual transaction processing for billing and payments. While we are still in the early days, we can see that the MM Connect will generate efficiencies both for our customers and for us.

Importantly, MM Connect also allows us to embed our systems in the processes of our customers, creating barriers to entry for our competitors and resulting in customer stickiness. We have recently introduced the ability for certain of our national account customers to place orders through the portal.After March 31, 2018, we have more than 17,000 users registered in MM Connect, an increase from approximately 6,000 at the end of last year. In addition, for our tank and pump customers, we continue to leverage EnviroTrack, our technology tool that allows customers to easily track and monitor the units around and usage [ph] among other things. EnviroTrack has become a tool our sales force utilize to gain an audience with potential customers and to gain traction with our existing customers for additional market share.

We believe the EnviroTrack played a major role in several of our recent wins. We are committed to continuing to evolve our processes while innovating collaboratively with our customers. This innovation, in combination with our infrastructure, creates a very compelling value proposition and foundation for growth.Lastly, I want to mention our focus on the safety of our employees and our business partners. Our safety record continues to be outstanding with an injury rate below 1.0.

Our safety results are industry-leading and something that cannot be achieved without a strong safety culture and well-organized operations. An exceptional safety record is an important decision factor for many of our customers and also drives cost savings from Mobile Mini in the form of decreased insurance and claim costs.So overall, a solid quarter with a continuation of many positive trends in the business and great execution. We expect that the momentum generated in the first quarter will continue in 2018 for both our business segments, and we are looking forward to a strong year.I will now hand over the call to Van, who will cover the financials.

Van Welch -- Chief Financial Officer

Thanks, Eric, and good morning. Beginning with revenue, I am very happy with our first-quarter top-line growth, which is considerably above our evergreen model. Execution of our strategic model drove a 13.4% total rental revenue increase when adjusted for favorable currency rates compared to Q1, 2017.On the tank and pump solutions side, rental revenues were up 21.7% year over year and average OEC on rent increased 24.7% with strong 73.6% utilization. As Erik mentioned, this recovery is multifaceted.

Overall, the environment for our customers is improving across our geographies and for the majority of the customer in segments, resulting in a general increase of activity and demand.Notably, in downstream, where we have focused much of our efforts, we're not only capitalizing on the overall market increase but also gaining a greater portion of our customers' overall spend. We achieved this increase by demonstrating high service levels and superior quality. In addition, over the last 18 months, our sales force infrastructure has been considerably strengthened with improved processes, tools, and personnel, resulting in a concerted effort and coordinated approach to targeting our various markets.As a whole, this transformed sale force drove increases with large national companies and further has very successfully pursued new diversified customers in local geographies. The rate for downstream remains a challenge.

However, we are seeing some signs of stabilization. Overall, year-over-year rates were down 2.2%. While negative, this is an improvement over the 4.1% decrease in Q4. Rates on newly placed units were up compared to the prior year.We are optimistic that prices will firm up on spot contracts and future MSA renewals as equipment demand increases.

Our storage solutions rental revenues were up 11.5% year over year, driven by increases in both units on rent, which is up 5% and rate increases of 3%. Importantly, as you can see on Slide 13, rental revenues for our North American storage solution, which represents approximately 80% of our storage solutions business, increased 14.6% with rate increases of 3.5%.As Erik mentioned, we have been especially successful in driving growth through our national accounts. In the U.K., as you can see on Slide 14, rental revenues are down just slightly year over year, decreased units on rent has been mitigated by increased rate. While the slower construction activity and uncertainty surrounding BREXIT are dampening growth in our U.K.

segment, we are pleased that our business has remained stable. And based on our current pipeline, we do not see a significant drop-off in 2018.Turning to profitability. As illustrated on Slide 11, our adjusted EBITDA was $48.6 million for the quarter, and our margin was 34.5% for Q1. Storage solutions' adjusted EBITDA of $40.6 million increased 10.3% from the prior year, adjusted for FX, and the margin was up slightly to 35.7%.

The adjusted EBITDA increase was due to the increased North American rental activity, partially offset by a decrease in the U.K. Driven by the growth in rental activity, tank and pump solutions' adjusted EBITDA of $8 million was up 42.7% compared to the prior year, with a 450-basis-point increase in margin from 25.2% in Q1 '17 to 29.7% in Q1 '18.As a percentage of total revenues, rental, selling, and general expenses were consistent with the prior-year quarter. Overall, these costs were up approximately 12% when adjusted for FX with increases in transportation and salary cost related to higher rental activity, as well as year-over-year increased variable compensation costs related to our performance in Q1 '18. Generally, the first quarter of the year has lower margins than the remaining quarters.

We expect our adjusted EBITDA margin to build meaningfully throughout the year.Free cash flow was a healthy $18.8 million in Q1 2018, albeit down $4.8 million from Q1 2017. A year-over-year increase in net capital expenditures of $7.1 million in response to increasing demand was partially offset by a $2.2 million increase in cash flow from operating activities.The chart on Slide 16 highlights our capex spend. In total for the first quarter, we had $16.1 million in net capital expenditures. During the quarter, we had net fleet capital expenditures of $11.5 million, of which $5.7 million was for North American storage solutions, $2.8 million was for U.K.

storage solutions, and $3 million related to tank and pump solutions. Due to increased rental activity, we now anticipate that capital expenditures for the full year 2018 may be slightly higher than 2017 levels.As you can see on Slide 17, total debt decreased $11.6 million in the quarter, largely due to repayment of an intercompany note between the U.K. and U.S. subsidiaries.

This one-time event resulted in the repatriation of existing cash from the U.K. to pay down the line of credit. Our leverage ratio, which is calculated using debt net of cash and therefore not affected by using this existing cash, ticked down to 4.8 times from 5 times. We continue to balance our long-term leverage goals with the current demand environment.

So overall, a really great quarter with the continuation and expansion of many positive trends in the business that we expect to continue into the rest of 2018.With that, I will turn the call over to the operator for questions. Thank you very much.

Questions and Answers:

Operator

Thank you. At this time, we'll be conducting a question-and-answer session [Operator instructions]. Our first question comes from the line of Scott Schneeberger with Oppenheimer. Please proceed with your question.

Scott Schneeberger -- Oppenheimer & Company -- Executive Director

Let's start out with EBITDA flow-through. Clearly, you have reiterated on this call that it's going to be much higher the back half of the year -- easier comp year over year on variable compensation -- but it is a lot of wood to chop after this first quarter. Could you just talk about does the flow-through guide of about 60% still impacts for the year? And talk a little bit more about the cadence of when we'll see it this year, please? Thanks.

Erik Olsson -- President and Chief Executive Officer

The 60% target or outlook for the year is definitely there. I think excluding just the year-over-year change in variable comp for Q1, we were basically up 60% in Q1 but we will see that build over the course of the year. We expect it to be well above 60% in the back half of the year. So that the year rounds out to that number.

Scott Schneeberger -- Oppenheimer & Company -- Executive Director

Also with capex being elevated, I realize it's a strong demand environment but I saw the, not on the slide right now, but I saw the $3 million spent in the U.K. And you're expecting stability going forward. I'm just curious what are some of these capex needs that you're spending on? Is it more robust demand? And how is utilization in the U.K. for instance, and the same question in North America progressing from there? Thanks.

Erik Olsson -- President and Chief Executive Officer

So the U.K. utilization is still, I think we had about 82% in the quarter. So it's still up there and a bit stable. However, we have capex we had a need in the first quarter so that we spent some money there, that those units are out or on rent already, but we've told the team over there that we're going to hold back until we understand better what the short-term impact of BREXIT will be, because we think it's a short-term thing but nevertheless.

In here in North America, we're spending capex into tremendous demand. It's incredible the way the first quarter developed both on the storage side as well as on the tank and pump side. On the storage side, we track pending orders. So orders we have received but not yet delivered, it's up by a factor of over 2 times compared to the same time last year.On the tank and pump side, we've talked about a lot of wins we've done on RFPs, RFQs that's been out, those revenues have not really impacted our results yet.

So we're looking for that to start to impact the back half of the year. And obviously, there without these wins, they are already utilized at almost 74% level. We hit an all-time high in that business in Q1. So the spend is really into a tremendous demand we're seeing now plus demand in combination with us taking, we're taking market share big time in both our businesses.

Van Welch -- Chief Financial Officer

I think, Scott, as we look at on the capex so I think in the Investor Day, we talked about a similar spin anticipated on capex in 2018. I think with the demand that we're seeing as Erik mentioned, that's going to go, we believe that will go up slightly associated with additional capex spend and meet that demand, primarily in the U.S. both in storage solutions and tank and pump. We would expect the U.K.

to probably fall off from the first-quarter spend in the future quarters.

Scott Schneeberger -- Oppenheimer & Company -- Executive Director

So holding it in a little bit more, just in North America storage solutions, the overall utilization is nowhere near the peak. So Erik is it more just, I understand it's a very strong demand environment, is it more of just not having the right assets in the right place and costing too much to move? So it's a matter of buying in certain areas. Is that what we're seeing here?

Van Welch -- Chief Financial Officer

Scott, we're doing well across the board but we're doing particularly well in the eastern side of the U.S. So we're having to spend the capex to get it there because the idle assets that we have are elsewhere in the country.

Scott Schneeberger -- Oppenheimer & Company -- Executive Director

And clearly, the trends are strong. I'd like to ask, what do you think for activations in April? I would imagine very good. It sounds like some very upbeat commentary but is the momentum continuing, is really this question.

Van Welch -- Chief Financial Officer

Yes, the momentum is definitely continuing. And if anything, I would say April is looking stronger than March, which may have to do with how holidays, etc. compared to last year but we're seeing an uptick here compared to Q1.

Operator

Next question is from the line of Sean Hannan with Needham and Company. Please proceed with your question.

Sean Hannan -- Needham & Company -- Managing Director

Just want to come back to the opex and was looking to see perhaps if you could elaborate a little bit more right now. Help us better understand why we don't specifically see that flow-through right now, help us perhaps break some of that down, the contributors. We have I think a little bit less SAP cost a year ago, I understand variable comp is a little bit higher. Just trying to understand the components for why we haven't seen that at this point.

So we could get some better confidence perhaps in your viewpoint that we should see that ramping a bit more in the back half of the year. Of course on my end, I'd assume that we should see some very sharp acceleration in that EBITDA flow-through but I'd like to see if we can get some more intangible support from you folks around how to think about what came through in this quarter and what to get there?

Van Welch -- Chief Financial Officer

Sean, first of all, back on the variable comp as in Q1 and Q2 of last year, we were accruing at a lower pace than we did in Q3 and Q4 as performance started to expand. As we started the year this year, we're seeing performance, as Erik mentioned, in terms of the growth and the outlook that we're looking at. That performance and growth are going to accelerate we believe. And we've recognized on the variable comp, not only what was done in the quarter but what our expectation is for the year.

So variable comp is a big piece of the variance year over year, it's about $2.9 million, that headwind in Q1 that if you exclude that variable comp it gets you closer to that 60% target.Now going forward, we're looking at double-digit revenue increases for the year. So we're going to see sequential revenue increases as we go throughout the year and margin expansion associated with that throughout the year. And our outlook is that we're going to still be in that, in 60% or greater flow-through for the year.

Erik Olsson -- President and Chief Executive Officer

We've had some increase in some operational costs on a year-over-year basis also with this rapid increase in demand. And I'm talking about the branch-to-branch relocation of fleets and those costs associated with satisfying this demand.

Sean Hannan -- Needham & Company -- Managing Director

And that's going to be a different type of cost than the typical variable cost that will move up with increased sales. So is that activity effectively -- how far through are we in the elevated cost for that portion of it then, Erik?

Erik Olsson -- President and Chief Executive Officer

It's obviously hard to say, but it depends on where the demand pops up, but I think we're through with a big part of it, so I would expect that to diminish also as we move across through the year here.

Sean Hannan -- Needham & Company -- Managing Director

And then just coming back to on the variable comp, just trying to recall, I hope this is correct, I think when we had the step-up and adjustment for recognizing a much higher level of variable comp that was 3Q '17. And so presumably then we got to 3Q '18 and that year on year is going to become much more normalized and favorable, correct?

Erik Olsson -- President and Chief Executive Officer

Yes, exactly right. So right now we are accruing at the rates so that we will not have to do a step-up later in the year. We want to avoid that situation but you're correct that this will turn in the second half of this year.

Van Welch -- Chief Financial Officer

Sean, just to add on to that just to make sure we're clear. The step-up actually occurred in Q3 and Q4, we've prorated and annualized that.

Sean Hannan -- Needham & Company -- Managing Director

And then last question here, switching over to tank and pump. The commentary was that, if I heard correctly, I thought pricing should be stabilizing here, at least we feel could be that way, still down a little bit year on year. Not sure if I may have missed something. How do rates look quarter on quarter? And what can you share in terms of new agreements or what might be behind some of these MSAs that are getting signed? What might be signaled there in terms of pricing? Just trying to get a better handle on that.

Thanks.

Van Welch -- Chief Financial Officer

I think in tank and pump, the pricing year over year was down 2.2% in tank and pump, that's an improvement. If you look at last quarter, I think we were down 2% quarter over quarter. Sequentially, we were down about 1% in tank and pump. I think going forward, as I mentioned in the prepared remarks, new MSAs, new spot contracts, we would expect that we would be able to drive higher rates.

Where the demand is where the market is, our expectation is that rate should be going up on those new agreements.

Sean Hannan -- Needham & Company -- Managing Director

And then just any elaboration around what perhaps was driving that moving down quarter on quarter. I don't want to put words in your mouth, just want to see if I can get some color beyond that.

Erik Olsson -- President and Chief Executive Officer

I think that 50% of our business is contractual and we have fixed rate, there is 50% or more on the spot basis. And while our utilization is very high, the industry has not yet come up to that level of utilization and we need the utilization to improve across the industry, I think until we can start to see price stabilization and price improvements in these markets outside of the downstream business.

Sean Hannan -- Needham & Company -- Managing Director

Completely makes sense. Thanks so much. And frankly, I will be blunt here, hope to see some share recovery, certainly positive about the name. I think there is an overreaction, seems like your business is doing very well.

And thanks for the time.

Operator

Our next question is coming from the line of Marc Riddick with Sidoti. Please state your question.

Marc Riddick -- Sidoti & Company -- Analyst

I wanted to see if you could bring us a bit of an update as to where you are with the planning and timing around Los Angeles and probably California later this year?

Erik Olsson -- President and Chief Executive Officer

So we're moving ahead with those plans. We have sites in place so we have the space needed and now we're making plans for getting equipment there and getting sales people in there. So it's moving along and we are cautiously very optimistic about that market. We know our most recent geographic expansion in the tank and pump into Philadelphia is now really hitting stride and being very, very successful and we think we should repeat that in LA.

Marc Riddick -- Sidoti & Company -- Analyst

Now, is there any way to get a sense of or if you could share with us some of the progress that's made with national accounts? Has that to some degree been part of the story with the expansion of national accounts of being in Southern California? I mean, has that played a role in and some of the growth of new account activity or what we expect to see later in the year?

Erik Olsson -- President and Chief Executive Officer

Not yet, Mark. Like I said, we're still in the opening innings or the initial phases of getting off the ground there yet. So we have not seen really, I mean, the revenue from there yet and I think the impact in 2018 should be considered to be minimal but we think it's more 2019, 2020 it should be contributing more significantly.

Marc Riddick -- Sidoti & Company -- Analyst

And then one other thing to touch on and you touched on this earlier as far as the expansion of technology offerings, as far as how many, I guess the take-rate [ph] around MM Connect and what have you. I think MM Connect was nearly triple what it was at the end of the year. So I was wondering if you just have a ballpark expectation in mind as to what that reach could be, whether it's short term or longer term by the way, what we should be thinking about that.

Erik Olsson -- President and Chief Executive Officer

I mean we, obviously, want to have as many customers as possible on it. And I think that's where the world is moving anyway. So eventually, I would expect to see maybe all of our customers on that system. And then we have 80,000 active customers, I think is the numbers.

So there is still a lot of room to grow here but we're very excited about what we're seeing initially. Our call volume into the service center at the customer care is down 24% on a year-over-year basis, which is significant. I mean, this shows that the MM Connect is satisfying their real need.

Operator

Our next question is from the line of Doug Mewhirter with SunTrust.

Doug Mewhirter -- SunTrust Robinson Humphrey -- Vice President

A question about the demand, particularly in North America on the portable storage side. How do you characterize, I guess, company-specific demand, where customers maybe are ordering more from you or you're taking a share because of the innovations you've made for better service levels, and general, I guess, economic demand, which would tell a different story. And could you even break down if you can the end markets where you seem to be getting the biggest groundswell? Is it multifamily and commercial construction? Is it industrial? Is it educational? Other than the execution on your side, it seems like there is economic build that seems bigger than what we're seeing in the economic data.

Erik Olsson -- President and Chief Executive Officer

Yes, I think we're seeing growth across the board. There is no question about that. It's a very good economy we're operating in here in North America at the moment but we saw 6%, 7% or so, 6% unit on rent growth, I believe. And so that would be the volume component here, and that's clearly twice the rate of the economy.

So we're definitely taking market share as well. We did a very good job in Q1 here in bridging our very strong seasonal business that we have in Q4, and working with our customers to extend, also switch those units, if you like, over into remodeling and construction projects on site. So we secured a lot of business that way. It appears that retail is going through a major remodeling cycle that does not happen every year but on a two-, three-, four-year basis and we're in one of those now and secured a lot of business there with them.Then construction, in general, is very good and we continue to do a great job in securing the units for the job sites very early on.

And lastly, our national account team has done an incredible job. I've talked about them in previous quarters but it just continues that we continue to sign up new agreements, new accounts. National accounts were up as much as 34% I believe of revenues in Q1 here. And those of you who've been around a while know only a few years ago, it was 18%, 19% of our revenue.

So almost doubled over the last two years, let's say.

Operator

[Operator instructions]. The next question comes from the line of Andrew Whitman with Robert W. Baird. Please proceed with your question.

Andrew Wittmann -- Robert W. Baird & Company -- Managing Director

The horse I am about to beat is only slightly dead, so I am going to go one more time. On the variable compensation, you guys suggested previously that it was going to be about a $10 million tailwind to '18, and so just recognizing here that we started with a headwind of $2.9 million. Does that lower the opportunity that you guys previously talked about as your tailwind, or is the tailwind still the same amount you're going to make up almost $13 million in the last three quarters?

Erik Olsson -- President and Chief Executive Officer

I don't know that. I think we were talking about different scenarios and so on. It all depends on the performance over the course of the year, whether this will be a neutral, net neutral for the year or potentially a tailwind. So at this point, like I said, we're seeing a very strong year.

So we want to avoid getting any headwinds, any actual headwinds in the back half of the year having to increase the rates of accrual there. So we are accruing aggressively at the moment. As I said, it all depends on how the rest of the year plays out.

Andrew Wittmann -- Robert W. Baird & Company -- Managing Director

The other thing I noticed just as I was looking at the storage yield bridge here was that, of the organic revenue growth that you guys posted, 4% of the 6% organic growth came from things like ancillary mix and trucking. Certainly, there was the rate in there as well but there is some of these other things that are more episodic in nature. So I guess my question is, is the mix shift that you're seeing in the trucking prices that you're realizing, are those things sustainable or was there something unusual about that that led to the yield performance in the quarter?

Erik Olsson -- President and Chief Executive Officer

No, those are definitely sustainable and we have moved up our rates in the quarter. And we don't think that there is any reason to believe that they won't stay there or that we actually won't be able to continue to drive rates as we go forward on the trucking.

Andrew Wittmann -- Robert W. Baird & Company -- Managing Director

Maybe just one more here then, related to the trucking. Obviously, you guys have cited that variable comp as one of the factors for the margins. With trucking being a pretty decent increase year over year and historically that being I think a lower-margin business. What are the other ancillary effects besides variable comp as you look at these other items as a percentage of revenue? Is trucking maybe a factor or repair and maintenance any other smaller light items that stick out at least that we should be aware of in the margin performance for the quarter?

Erik Olsson -- President and Chief Executive Officer

I think like you said trucking is a lower margin activity. The sales revenue that we do also lower margin activity, while it creates good EBITDA dollars but slightly lower. We also had a little bit of a geographic impact on the margin in the quarter. U.K., which is the higher-margin geography than tank and pump, at the moment, for example, U.K.

were flat while tank and pump grew significantly. So that had about a 50-basis-point impact on the margin overall, so there is just things like that.

Andrew Wittmann -- Robert W. Baird & Company -- Managing Director

And then just moving to my last one then, I guess my question was going to be a broader-picture question. Erik, as you look at the national accounts, recognizing that, like you said, as a percentage of revenue, you've I guess doubled over the last couple of the years or so. When you look at the pipeline that you're chasing for further national account gains that like you've seen the last couple of years, is it full enough to continue the trend line and the growth rates that you posted in that business, or is it starting to get converted in the comparisons? Are they getting harder to continue to growth at that rate?

Erik Olsson -- President and Chief Executive Officer

No, I think as our team gets smarter and then we get smarter and understanding more of the market, we see a tremendous opportunity. We just met with a team and they have a bridge to a $300 million opportunity here in this segment. So I'm not saying that we jump to $300 million overnight but we clearly have those customers in sight and targeted. Its customers and its wallet share with increased continued wallet share with existing national accounts.

Operator

Our next question is follow up from Sean Hannan with Needham and Company.

Sean Hannan -- Needham & Company -- Managing Director

Just a question here on pricing, just digging through some history here. So aggregate total pricing up 3% that's, I think, pretty consistent and more or less in line with I think what we should be expecting. Just want to see if we can get some validation around that but primarily I want to focus on the new units. So, up about 90 basis points, I do realize that that's always going to be a variable number but want to see if you could provide some insight for that stat versus what we accomplished the last two quarters, which were outperforming.

I think we did about 3.9% through new units in September and then a little over 5% in December. And also if I look over the course of, say, last two years, that's the lowest level we have for the new units. Now I am not worried about that, but just want to see if you could provide a little bit of color to understand the ebbs and flows. Thanks.

Erik Olsson -- President and Chief Executive Officer

I think we could follow up online on the history there, because I don't recognize such high numbers on new units, but generally speaking, we see no reason to think that we can't continue to at least the pace we've been talking about 2% to 3%. We're very happy with 3% here in Q1. And the 0.9% or so per quarter basically translates into the 3% rate if we do that every quarter for the year. Importantly, though, is that what we don't really see in these numbers, which is the bigger contributor to the year-over-year number, is the bi-annual rate increases we do on units that have been out on rent for more than 12 months.

And twice a year we check everything that's out and we raise rates on those, and that has a significant contribution to the 3% effort.

Van Welch -- Chief Financial Officer

Sean, just to break down that number a bit, the 3% actually in the U.S., it was more like 3.5%, which definitely has strengthened the market. The U.K. was a bit lower. I think they are still getting right even though their volumes are down but their rate was about 1.3%.

Operator

At this time, I'll turn the floor back to management for closing remarks.

Erik Olsson -- President and Chief Executive Officer

All right. Thank you. And thank you very much, everyone, for being on the call. We had a great first quarter.

We're looking forward to a great second quarter as well and a strong year as we said. We're looking at double-digit revenue growth for the year, a flow-through build as we move through the quarters through a significant flow-through in the back half of the year and obviously, strong margin improvement to go along without with that. So thank you very much.

Operator

[Operator signoff]

Duration: 50 minutes

Call Participants:

Erik Olsson -- President and Chief Executive Officer

Van Welch -- Chief Financial Officer

Scott Schneeberger -- Oppenheimer & Company -- Executive Director

Sean Hannan -- Needham & Company -- Managing Director

Marc Riddick -- Sidoti & Company -- Analyst

Doug Mewhirter -- SunTrust Robinson Humphrey -- Vice President

Andrew Wittmann -- Robert W. Baird & Company -- Managing Director

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