Willscot Holdings Corporation · NASDAQ:WSC
Willscot — Q1 2024 Earnings Presentation
54 slides from Willscot's earnings presentation, May 2, 2024
Slide 1: Quarterly Investor Presentation First Quarter 2024
May 2, 2024 Quarterly Investor Presentation First Quarter 2024
Slide 2: Safe Harbor: Forward Looking Statements
Safe Harbor Forward Looking Statements This presentation contains forward-looking statements (including the guidance/outlook contained herein) within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934, as amended. The words
Slide 3: Safe Harbor: Recent Developments
Safe Harbor Recent Developments Entry into an Agreement to Acquire McGrath RentCorp On January 28, 2024, the Company, along with its newly formed subsidiaries, Brunello Merger Sub I, Inc. (“Merger Sub I”) and Brunello Merger Sub II, LLC (“Merger Sub II”), entered into an Agreement and Plan of Merger
Slide 4: Table of Contents
Table of Contents 5 WillScot Mobile Mini Business Overview 20 WillScot Mobile Mini to Acquire McGrath 29 Q1 2024 Operating Results 32 Q1 2024 Financial Review 39 Value Drivers 43 Appendix 4
Slide 5: The Continuous Evolution of Turnkey Spaces
The Continuous Evolution of Turnkey Spaces Leading Onsite Comfort & Facilities Climate-Controlled Storage Clearspan Structures From restrooms to efficient climate control, we Seamlessly manage temperature sensitive goods Expansive, durable, and highly configurable aim to make your site as comfortabl
Slide 6: WSC has an established formula to drive sustainable growth and returns
WSC has an established formula to drive sustainable growth and returns 1 Clear Market Leadership #1 In >$15B North American market for flexible space solutions Unlevered IRRs on portable storage and turnkey modular space >25% fleet investments 2 Compelling Unit Economics And Return on Invested Capit
Slide 7: Most flexible and cost-effective temporary space and storage solutions
We offer the most flexible and cost-effective temporary space and storage solutions 132 FLEX units in use during an Olympic stadium project in Montreal. WillScot supports repairs at the Statue of Liberty… WSC modular facilities utilized in the construction of the Palo Alto Public Safety building. VA
Slide 8: Our scale is a key competitive advantage and value driver
Our scale is a key competitive advantage and value driver for our customers We leverage our scale to win locally ~132M+ square feet of turnkey space relocatable anywhere in North America Sophisticated commercial and operational technology platform ~5,000 experts safely work ~10M hours annual
Slide 9: Inherently sustainable business and pioneer in industrial circular economy
Our business is inherently sustainable and a pioneer within the industrial circular economy Alternatives Our circular economy solutions Our current solutions Future value proposition Ready to Work solution Temporary • We have implemented Incorporates VAPS to drive reuse space of more products and eq
Slide 10: We serve diverse customer segments and can reposition within them
We serve diverse customer segments and have the ability to reposition within them Revenue By Customer Segment1 Customer Segment Outlook Engineering & Architecture – 3% Highway & Heavy Construction – 4% Construction & Home Builders & Developers – 12% Infrastructure Non-Residential & GCs – 13% Conti
Slide 11: Our lease revenues compound predictably, irrespective of market conditions
Our lease revenues compound predictably, irrespective of market conditions $1.9B Leasing Revenue LTM GDP¹ Non-residential construction square foot starts¹ Lease Revenue2 Increase of ~85% $1.0B Lease Revenue2 2019 2020 2021 2022 2023 / 2024 “Normal” Demand COVID Shock Post-COVID Inflection “Exception
Slide 12: We have compelling unit economics
We have compelling unit economics Illustrative unit level cumulative cash flow 1 Capital investment Rapid Maintenance Proceeds Realized residual values • IRR ~30% over Portable Storage Containers2 Average acquisition cost of payback of Low annual ~$6K ~35 months maintenance costs average >50% of ori
Slide 13: Long history of compounding unit returns with Value-Added Products
We have a long and consistent history of compounding unit returns with Value-Added Products • ~15% per unit per month rent CAGR over 10 years • Units on Rent up >2x • Quarterly VAPS revenue up ~10x Historical Progression of Modular Space VAPS Average Monthly Rate1,2 $/unit 2019-2024 Average UOR: ~10
Slide 14: VAPS are our largest opportunity and drive predictable multi-year growth
VAPS are our largest opportunity and a great example of how innovation drives predictable multi-year growth across our portfolio Modular Units VAPS Future Revenue Potential1,2 $98 700 $/unit 95.8k Units1,2 x + $207 x 12 mo. = $351M 600 500 207 -2% Y/Y 400 +5% Y/Y 98 300 600 • ~$351M revenue growth o
Slide 15: A robust and growing Free Cash Flow profile
We have a robust and growing Free Cash Flow profile Carve-Out and Minimal North American Investment under Transforming Accelerating Growth Global Ownership Structure for Growth • Capex is discretionary due to long-lived assets and can be adapted to market cycles Avg. EBITDA less Net Capex 275 173 88
Slide 16: Initiatives representing over $1B of growth opportunity
We are executing initiatives representing over $1B of growth opportunity POTENTIAL ($M) Value Added Products ~$500 and Services (VAPS) Lease Rate Optimization ~$200 Market Penetration ~$200 Logistics ~$50 Recent M&A and MODULAR ~$70 Scale Efficiencies STORAGE 16
Slide 17: Our growth algorithm is simple with multiple paths to compound returns
Our growth algorithm is simple and we have multiple paths to drive predictable compound returns to shareholders over time Moves directionally with GDP overweight to non-residential construction Governed by 3-year lease duration Value Predictable Adj. Double Digit Volume Rate Added Margin EBITDA
Slide 18: Eclipsing 3-5 year milestones established at 2021 Investor Day
Eclipsing 3 – 5 year milestones established at 2021 Investor Day through growth mindset and consistent execution 3 – 5 Year Updated Operating 2024E – 2026E Portfolio of growth initiatives gives us Performance Metric1 Q1 2024 LTM Range Operating optionality and multiple organic paths to (‘21 Invest
Slide 19: Table of Contents
Table of Contents 5 WillScot Mobile Mini Business Overview 20 WillScot Mobile Mini to Acquire McGrath 29 Q1 2024 Operating Results 32 Q1 2024 Financial Review 39 Value Drivers 43 Appendix 19
Slide 20: A highly synergistic combination
A highly synergistic combination Key Benefits Key Pro Forma Metrics ✓ Extends position in North America in turnkey space solutions with enhanced geographic coverage and a more diversified platform $3.2B ~$1.4B (~45%) ~$700M ✓ Strengthens service offering, customer diversity and expands Value-Added P
Slide 21: Transaction summary
Transaction summary • WillScot Mobile Mini to acquire McGrath (“McGrath”) for an enterprise value of $3.8B • Represents 9.5x McGrath’s 2024E Adj. EBITDA1 including run-rate operating synergies • McGrath shareholders will receive, for each of their shares, either $123.00 in cash or 2.8211 shares of W
Slide 22: Compelling strategic and financial rationale
Compelling strategic and financial rationale Strategic Financial ✓ Combination of two highly complementary companies with leadership positions in turnkey space solutions ✓ Enhanced ability to serve a more diverse set of customers $3.2B ~$1.4B ✓ Broad rental fleet with long rental duration and useful
Slide 23: Combination enhances customer value proposition
Combination enhances customer value proposition ✓ Increased capabilities to service customers consistently FLEX ✓ Increased customer access to innovative products and services, including Value-Added Products, ProRack, Cold Storage, and ClearSpan structures ✓ Greater available fleet of ~475K pro form
Slide 24: Complementary customer segments with benefits from diversification
Complementary customer segments with benefits from diversification Diverse Customer Segments1… …Driving Demand $2.4B $0.8B $3.2B Broad-Based Exposure to GDP with Education 5% Education Overweight to Non-Residential Government / Government / Healthcare 12% Healthcare Construction 3% 3% Energy & Natur
Slide 25: Track record of delivering identified operating synergies
Track record of delivering identified operating synergies Expected Run-Rate Operating Synergies of $50M Adj. EBITDA Expansion via Organic & Inorganic Growth $50M $50M Logistics & $322M ✓ Insourcing and optimization of trucking Third-Party Services: and fleet maintenance spend ~$10M $347M ✓ Operating
Slide 26: Compelling sources of stakeholder value creation
Compelling sources of stakeholder value creation Revenue Margins ROIC 1 Cross-sell VAPS 2 Cross-sell Flex, Clearspan, and Climate-Controlled solutions within MGRC 3 Cross-sell Kitchens-To-Go, Enviroplex, and custom modular sales capabilities within WSC 4 Diversify into new customer segments 5 Drive
Slide 27: Acquisition benefits all stakeholders
Acquisition benefits all stakeholders FLEX ClearSpan Enhances value proposition of turnkey space solutions across key customer segments Significant, high certainty synergies achievable based on WillScot Mobile Mini’s track record of substantial value creation through M&A VAPS Powerful cash flow char
Slide 28: Table of Contents
Table of Contents 5 WillScot Mobile Mini Business Overview 20 WillScot Mobile Mini to Acquire McGrath 29 Q1 2024 Operating Results 32 Q1 2024 Financial Review 39 Value Drivers 43 Appendix 28
Slide 29: Consistent rental rate performance reflects differentiated value proposition
Our consistent rental rate performance reflects our differentiated value proposition Modular Space Unit Average Monthly Rental Rate1 $/unit per month 13% 11% 19% 16% 1,130 1,145 1,149 1,091 1,010 1,031 • Modular space unit average monthly rental rate increased 11% Y/Y to $1,149 1,150 977 914 858 950
Slide 30: Stable portfolio of units on rent underpinned by 3-year lease duration
Our stable portfolio of units on rent is underpinned by 3-year lease duration Average Modular Space Units on Rent1 in thousands 102.0 98.9 102.9 98.2 103.1 97.7 100.7 99.8 95.8 • 4% decline in average modular units on rent, with strength in industrial and 100.0 manufacturing and the southern U.S. of
Slide 31: Table of Contents
Table of Contents 5 WillScot Mobile Mini Business Overview 20 WillScot Mobile Mini to Acquire McGrath 29 Q1 2024 Operating Results 32 Q1 2024 Financial Review 39 Value Drivers 43 Appendix 31
Slide 32: Strong financial performance continued in Q1 2024
Our strong financial performance continued in Q1 2024 Metric Commentary Results driven by Value-Added Products penetration, supported by value-based Y/Y Change in Leasing Revenue +5% selling and our price management tools and processes Solid execution and strong rate optimization in seasonally slowe
Slide 33: Delivered Total Revenue growth of 4% in Q1 2024
Delivered Total Revenue growth of 4% in Q1 2024 Revenue Adjusted EBITDA1 $M $M 700 4% • Leasing revenue increased 5% Y/Y, driven by VAPS penetration, increased pricing as a result of our price management tools and processes, and higher 600 587 rental rates on climate-controlled containers 565 26 19
Slide 34: Free Cash Flow is accelerating on recurring lease revenues
Free Cash Flow is accelerating due to predictable, recurring lease revenues and capital management Net Cash Provided By Operating Activities1 (9)% $M 7% 9% 210 219 40% 209 202 191 200 • Continued strong operating cash flow from predictable, recurring lease 188 revenues 146 149 • $19M Y/Y Net Capex i
Slide 35: Appropriate leverage and flexible long-term debt structure
We maintain appropriate leverage and a flexible long-term debt structure Liquidity and Debt Maturity Profile1 $M • Leverage at 3.3x last-twelve-months Adj. EBITDA of $1.06B • ~$1.3B+ available liquidity in our revolving credit facility • Utilized Q1 2024 Cash Provided by Operating Activities of $209
Slide 36: LTM capital allocation consistent with long-term framework
Our LTM capital allocation is consistent with our long-term framework Capital Allocation Framework $1,351 LTM Capital Generated $1,351 LTM Capital Allocated $5 – $6B Over 5 Years $M | % $M | % % 111 | 204 | 25% 8% 15% 419 | 621 | 50% 25% 31% 821 | 61% = 46% 526 | 39% Net Capex Cash From Operations N
Slide 37: Q1 2024 results support FY 2024 Outlook
Q1 2024 results with solid Modular and Value-Added Products demand support FY 2024 Outlook 2023 Results 2024 Outlook $M From Continuing Operations (excludes MGRC) Revenue $2,365 $2,485 - $2,635 Adjusted EBITDA1,2 $1,061 $1,125 - $1,200 Net CAPEX $185 $250 - $300 • 5% - 11% expected Revenue growth re
Slide 38: Table of Contents
Table of Contents 5 WillScot Mobile Mini Business Overview 20 WillScot Mobile Mini to Acquire McGrath 29 Q1 2024 Operating Results 32 Q1 2024 Financial Review 39 Value Drivers 43 Appendix 38
Slide 39: Initiatives representing over $1B of growth opportunity
We are executing initiatives representing over $1B of growth opportunity POTENTIAL ($M) Value Added Products ~$500 and Services (VAPS) Lease Rate Optimization ~$200 Market Penetration ~$200 Logistics ~$50 Recent M&A and MODULAR ~$70 Scale Efficiencies STORAGE 39
Slide 40: Growth, cash generation, and capital allocation drive shareholder returns
Our growth, cash generation, and capital allocation drive shareholder returns and value creation • Strong confidence in sustained growth given our forward visibility & availability of $1B organic growth levers. • Clear line of sight to $700M annual free cash flow as the portfolio rolls forward predi
Slide 41: Our values: health & safety, inclusion, community
Dedicated To Health Committed To Driven To Excellence Trustworthy & Devoted To Our Community & Safety Inclusion & Diversity Reliable Customers Focused We take responsibility for We are stronger together We measure success We hold ourselves We anticipate the We actively engage in our own well-being a
Slide 42: Table of Contents
Table of Contents 4 WillScot Mobile Mini Business Overview 20 WillScot Mobile Mini to Acquire McGrath 29 Q1 2024 Operating Results 32 Q1 2024 Financial Review 39 Value Drivers 43 Appendix 42
Slide 43: Strategy and execution driving sustainable growth and returns
Strategy and execution driving sustainable growth and returns Historical Return on Invested Capital1 $M 17.7% 17.3% 3,500 15.4% 15.0% 3,000 11.7% 9.6% 10.0% 2,500 5.0% 2,000 0.0% 1,500 1,000 -5.0% 500 -10.0% - -15.0% 2020 2021 2022 2023 Q1 2024 LTM Average Invested Capital Adjusted Earnings Before I
Slide 44: Summary P&L, balance sheet and cash flow items
Summary P&L, balance sheet and cash flow items Three Months Ended March 31, Key Profit & Loss Items (in thousands) 2024 2023 Leasing and Services Leasing $460,601 $439,951 Delivery and Installation 100,362 106,630 Sales New Units 13,499 10,657 Rental Units 12,719 8,230 Total Revenues 587,181 565,468
Slide 45: Consolidated quarterly performance
Consolidated quarterly performance Modular Space Unit Average Monthly Rental Rate1 Portable Storage Unit Average Monthly Rental Rate1 $/unit per month $/unit per month 262 262 1,130 1,145 1,149 242 1,091 1,010 1,031 218 214 223 977 914 195 176 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 Q2 22 Q3
Slide 46: Consolidated quarterly performance
Consolidated quarterly performance1,2 Quarterly Results for the three months ended March 31, 2024: (in thousands, except for units on rent and monthly rental rate) Q1 Q2 Q3 Q4 Total Revenue $ 587,181 $ 587,181 Gross profit $ 316,888 $ 316,888 Adjusted EBITDA $ 248,009 $ 248,009 Net CAPEX $ 64,776 $
Slide 47: Reconciliation of non-GAAP measures – Adjusted EBITDA
Reconciliation of non-GAAP measures – Adjusted EBITDA Adjusted EBITDA is a non-GAAP measure defined as net income (loss) before income tax expense (benefit), net interest (income) expense, depreciation and amortization adjusted for certain items considered non-core to our business operations includi
Slide 48: Reconciliation of non-GAAP measures – Adjusted EBITDA Margin %
Reconciliation of non-GAAP measures – Adjusted EBITDA Margin %1 We define Adjusted EBITDA Margin as Adjusted EBITDA divided by revenue. Income from Continuing Operations Margin is defined as Income from continuing operations divided by revenue. Management believes that the presentation of Adjusted E
Slide 49: Reconciliation of non-GAAP measures – Net Debt to Adjusted EBITDA ratio
Reconciliation of non-GAAP measures – Net Debt to Adjusted EBITDA ratio Net Debt to Adjusted EBITDA ratio is defined as Net Debt divided by Adjusted EBITDA from the last twelve months. We define Net Debt as total debt from continuing operations net of total cash and cash equivalents from continuing
Slide 50: Reconciliation of non-GAAP measures – Net CAPEX
Reconciliation of non-GAAP measures – Net CAPEX We define Net CAPEX as purchases of rental equipment and refurbishments and purchases of property, plant and equipment (collectively, "Total Capital Expenditures"), less proceeds from the sale of rental equipment and proceeds from the sale of property,
Slide 51: Reconciliation of non-GAAP measures – Free Cash Flow and Margin
Reconciliation of non-GAAP measures – Free Cash Flow and Free Cash Flow Margin Free Cash Flow is a non-GAAP measure. We define Free Cash Flow as net cash provided by operating activities, less purchases of, and proceeds from, rental equipment and property, plant and equipment, which are all included
Slide 52: Reconciliation of non-GAAP measures – Return on Invested Capital
Reconciliation of non-GAAP measures – Return on Invested Capital Return on Invested Capital is defined as adjusted earnings before interest and amortization divided by average invested capital. Adjusted earnings before interest and amortization is the sum of income (loss) before income tax expense,
Slide 53: Reconciliation of non-GAAP measures – Return on Invested Capital
Reconciliation of non-GAAP measures – Return on Invested Capital Return on Invested Capital is defined as adjusted earnings before interest and amortization divided by average invested capital. Adjusted earnings before interest and amortization is the sum of income (loss) before income tax expense,
Slide 54: WillScot Mobile Mini Holdings Corp
WILLSCOT = MOBILE MINI HOLDINGS CORP wiiscot] | gaohile mini