Willscot Holdings Corporation · NASDAQ:WSC
Willscot — Q4 2023 Earnings Presentation
50 slides from Willscot's earnings presentation, Feb 20, 2024
Slide 1: Quarterly Investor Presentation Fourth Quarter 2023
February 20, 2024 Quarterly Investor Presentation Fourth Quarter 2023
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: Recent Developments: Agreement to Acquire McGrath RentCorp
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 3 WillScot Mobile Mini Business Overview 17 Q4 2023 Operating Results 20 Q4 2023 Financial Review 27 Value Drivers 31 Appendix 4
Slide 5: The Industry Leader in Turnkey Space Solutions
The Industry Leader in Turnkey Space Solutions Unmatched Logistics Turnkey Space Solutions Turnkey Storage Solutions Ability to deploy solutions when and Multiple options and configurations, combined with essentials Highly customized storage solutions to where our customers need them – such as furni
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 >$10B 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 Doublewide trailers at a PGA event. Star quarterback of the Kansas City Chiefs, Patrick Mahomes, keeps warm in one of our FLEX units. FLEX classrooms being used at Long Island Lutheran High School. Our temporary clea
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 ~130M+ 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 and a pioneer within the 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 modular and of more products
Slide 10: Diverse customer segments with ability to reposition
We serve diverse customer segments and have the ability to reposition within them Revenue By Customer Segment1 Customer Segment Outlook Engineering & Architecture – 3% Non-residential construction square foot starts down in 2023 vs. 2022 Highway & Heavy Construction – 3% levels, with a stable outl
Slide 11: Lease revenues compound predictably irrespective of market conditions
Our lease revenues compound predictably, irrespective of market conditions $1.8B Leasing Revenue LTM GDP¹ Non-residential construction square foot starts¹ Lease Revenue2 Increase of ~80% $1.0B Lease Revenue2 2019 2020 2021 2022 2023 “Normal” Demand COVID Shock Post-COVID Inflection “Exceptional” Dem
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 Consolidated Modular Space VAPS Average Monthly Rate1,2 $/unit Q3 2020-2023
Slide 14: VAPS are our largest opportunity for 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 $83 700 $/unit 99.8k Units1,2 x + $243 x 12 mo. = $390M 600 243 500 400 +2% Y/Y • ~$390M revenue growth opportunity in modul
Slide 15: 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 ~$70 Scale Efficiencies STORAGE 16
Slide 17: Our growth algorithm is simple with multiple paths to compound returns
Our growth algorithm is simple and we have multiple paths to drive predictable compound returns to shareholders over time Moves directionally with GDP overweight to non-residential construction Governed by 3-year lease duration Value Predictable Adj. Double Digit Volume Rate Added Margin EBITDA
Slide 18: Eclipsing 3-5 year milestones established at 2021 Investor Day
Eclipsing 3 – 5 year milestones established at 2021 Investor Day through growth mindset and consistent execution 3 – 5 Year Updated Operating 2024E – 2026E Portfolio of growth initiatives gives us Performance Metric1 Q4 2023 LTM Range Operating (‘21 Investor Day) Ranges optionality and multiple or
Slide 19: Table of Contents
Table of Contents 3 WillScot Mobile Mini Business Overview 17 Q4 2023 Operating Results 20 Q4 2023 Financial Review 27 Value Drivers 31 Appendix 19
Slide 20: Consistent rental rate performance reflects differentiated value proposition
Our consistent rental rate performance reflects our differentiated value proposition Modular Space Unit Average Monthly Rental Rate Consolidated ($/unit per month)1 19% 16% 13% 20% 1,051 1,089 1,102 1,100 989 940 972 882 826 810 900 758 796 • Consolidated modular space unit average monthly rental ra
Slide 21: 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 Rent Consolidated (in thousands) • 2.2% decline in modular units on rent in Modular Segment, with strength in 101.2 103.6 102.1 101.1 104.6 101.1 100.5 105.4 100.3 102.3 105.6 99.8 industrial
Slide 22: Table of Contents
Table of Contents 3 WillScot Mobile Mini Business Overview 17 Q4 2023 Operating Results 20 Q4 2023 Financial Review 27 Value Drivers 31 Appendix 22
Slide 23: Our record financial performance continued in Q4 2023
Our record financial performance continued in Q4 2023 Metric1 Commentary Results driven by pricing and Value-Added Products penetration, supported by Y/Y Change in Leasing Revenue +5% value-based selling and our price management tools and processes Q4 2023 Adjusted EBITDA Solid execution and strong
Slide 24: Total Revenue growth of 4% and Adjusted EBITDA growth of 7% in Q4 2023
Delivered Total Revenue growth of 4% and Adjusted EBITDA growth of 7% in Q4 20231,2 Revenue2 Adj. EBITDA1 $M $M 700 • Leasing revenue increased 5% Y/Y • Modular up 6% vs. 4% in storage; impacted by slower retail season 4% 612 • Delivery and Installation revenue decreased 3% Y/Y 591 600 • Driven by s
Slide 25: Free Cash Flow accelerating on top-line growth and margin expansion
Free Cash Flow is accelerating due to top-line growth, margin expansion, and capital management Net Cash Provided By Operating Activities2 $M (9)% 9% 7% • Continued strong operating cash flow from predictable long duration lease 210 219 2% 202 191 200 revenues 188 146 149 140 148 • $24M Y/Y Net Cape
Slide 26: 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 • ~$1.2B+ available liquidity in our revolving credit facility • Utilized Q4 2023 / FY 2023 Cash Provided by Operating Activiti
Slide 27: LTM capital allocation consistent with long-term framework
Our LTM capital allocation is consistent with our long-term framework Capital Allocation Framework $1,744 LTM Capital Generated $1,744 LTM Capital Allocated $5 – $6B Over 5 Years $M | % $M | % % 165 | 185 | 396 | 25% 9% 11% 23% 761 | 50% 25% 586 | 44% = 832 | 48% 562 | 32% 33% Net Capex Net Capex Ca
Slide 28: 2024 outlook implies Adj. EBITDA growth of 6% - 13%
Our 2024 outlook implies Adj. EBITDA growth of 6% - 13% from continuing operations 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 relative t
Slide 29: Table of Contents
Table of Contents 3 WillScot Mobile Mini Business Overview 17 Q4 2023 Operating Results 20 Q4 2023 Financial Review 27 Value Drivers 31 Appendix 29
Slide 30: 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 30
Slide 31: 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 32: Table of Contents
Table of Contents 3 WillScot Mobile Mini Business Overview 17 Q4 2023 Operating Results 20 Q4 2023 Financial Review 27 Value Drivers 31 Appendix 32
Slide 33: Dedicated To Health & Safety
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 34: Strategy and execution driving sustainable growth and returns
Strategy and execution driving sustainable growth and returns Historical Return on Invested Capital1 $M 17.7% 3,500 15.4% 15.0% 3,000 11.7% 9.6% 10.0% 2,500 6.8% 5.0% 2,000 0.0% 1,500 1,000 -5.0% 500 -10.0% - -15.0% 2019 2020 2021 2022 2023 Average Invested Capital Adjusted Earnings Before Interest
Slide 35: Summary P&L, balance sheet and cash flow items
Summary P&L, balance sheet and cash flow items Three Months Ended December 31, Twelve Months Ended December 31, Key Profit & Loss Items (in thousands) 2023 2022 2023 2022 Leasing and Services Leasing $477,895 $455,903 $1,833,935 $1,621,690 Delivery and Installation 102,197 105,756 437,179 429,152 Sa
Slide 36: Consolidated quarterly performance
Consolidated quarterly performance Modular Space AMR / UOR1 Portable Storage AMR / UOR1 $M $M 1,102 266 1,051 1,089 246 989 226 250 940 972 220 216 882 197 826 200 178 166 150 100 50 0 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 Modular Space Avera
Slide 37: Consolidated quarterly performance
Consolidated quarterly performance1 Quarterly Results for the twelve months ended December 31, 2023: (in thousands, except for units on rent and monthly rental rate) Q1 Q2 Q3 Q4 Total Revenue $ 565,468 $ 582,089 $ 604,834 $ 612,376 $ 2,364,767 Gross profit $ 323,128 $ 327,872 $ 339,694 $ 343,176 $ 1
Slide 38: Modular Solutions Segment quarterly performance
Modular Solutions Segment quarterly performance Revenue1,2 Modular Space AMR / UOR1,2 $M $M 450 388 388 1,155 400 362 356 371 1,102 1,142 335 350 1,046 350 999 1,028 289 894 939 300 250 200 150 100 50 0 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 A
Slide 39: Modular Solutions Segment quarterly performance
Modular Solutions Segment quarterly performance1,2 Quarterly Results for the twelve months ended December 31, 2023: (in thousands, except for units on rent and monthly rental rate) Q1 Q2 Q3 Q4 Total Revenue $ 349,670 $ 370,675 $ 387,806 $ 387,515 $ 1,495,666 Gross profit $ 165,335 $ 172,740 $ 181,17
Slide 40: Storage Solutions Segment quarterly performance
Storage Solutions Segment quarterly performance Revenue1,2 Portable Storage AMR / UOR1 $M $M 234 216 216 217 225 266 211 246 188 220 216 226 163 197 178 166 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 Adjusted EBITDA1,2 Portable Storage Average UOR
Slide 41: Storage Solutions Segment quarterly performance
Storage Solutions Segment quarterly performance1,2 Quarterly Results for the twelve months ended December 31, 2023: (in thousands, except for units on rent and monthly rental rate) Q1 Q2 Q3 Q4 Total Revenue $ 215,798 $ 211,414 $ 217,028 $ 224,861 $ 869,101 Gross profit $ 157,793 $ 155,132 $ 158,515
Slide 42: 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 43: 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 44: 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 45: 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 46: Reconciliation of non-GAAP measures – Free Cash Flow and Free Cash Flow 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 47: 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 net assets. Adjusted earnings before interest and amortization is the sum of income (loss) before income tax expense, net interest (
Slide 48: 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 net assets. Adjusted earnings before interest and amortization is the sum of income (loss) before income tax expense, net interest (
Slide 49: Common Stock Outstanding
Common Stock Outstanding Outstanding as of December 31, 2023 Total Common Shares 189,967,135 Single Class of Common Stock Q4 2023 • 3.5M common shares repurchased for $136M under share repurchase authorization during the quarter • 18.5M common shares repurchased for $811M and 8.6% reduction in share
Slide 50: WillScot Mobile Mini
WILLSCOT = MOBILE MINI HOLDINGS CORP wiiscot] | gaohile mini