Willscot Holdings Corporation · NASDAQ:WSC
Willscot — Q3 2019 Earnings Presentation
33 slides from Willscot's earnings presentation, 2019
Slide 1: Quarterly Investor Presentation Third Quarter 2019
Quarterly Investor Presentation Third Quarter 2019 1
Slide 2: Safe Harbor
Safe Harbor Forward Looking Statements This presentation contains forward-looking statements (including the earnings 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.
Slide 3: Temporary space solutions are our business
Temporary space solutions are our business. Everything about our company, from our expert staff to our turnkey solutions to our network of locations, is designed to make it easier for customers to make one call and get a complete, immediately functional temporary space solution. Our solutions are Re
Slide 4: WillScot at a Glance
WillScot at a Glance Established Brand with Strong Legacy of Innovation Key Differentiating Attributes Specialty rental services market leader providing modular space and 1 portable storage solutions to diverse end markets across North Customers value our solutions; America for over 60 years “Ready
Slide 5: Transformational Growth Since 2017 Has Created A Specialty Rental Market Leader
Transformational Growth Since 2017 Has Created A Specialty Rental Market Leader 2017(2) 2019(3) % Growth (1) Revenue $446MM $1.05B-$1.10B +140% Adj. EBITDA(1) $124MM $355MM-$365M +190% Adj. EBITDA Margin(1)% 27.8% 33.3% +550bps Rental equipment, net $833MM $1,953MM +135% Employees ~1,350 ~2,500 +85%
Slide 6: Q3 Highlights Support Run-Rate Expectations for 2020
Q3 Highlights Support Run-Rate Expectations for 2020 Q3 results continued transition to higher quality lease revenue; reaffirming full year 2019 Adj. EBITDA(1)outlook of $355 – $365M and expectation of $400M run-rate heading into 2020 1 Delivered $272.3 million of Revenue in Q3, a 15.1% YOY pro form
Slide 7: Q3 Results Complete WSC's Transition To Higher Value Lease Revenue Mix
Q3 Results Complete WSC's Transition To Higher Value Lease Revenue Mix Q3 Adjusted EBITDA(1) Walk ModSpace hurricane relief export US$m sale contributed $26M revenue and $7M Adj. EBITDA in PF Q3 Results ▪ Q3 2019 Adj. EBITDA(1) up $8.8 million, or 9.2 11.1% year over year, as compared to Q3 2018 10.
Slide 8: US Core Leasing KPI Snapshot
US Core Leasing KPI Snapshot Modular - US Segment Pro forma(1) Results AMR / UOR (US$) 632 Modular Space ▪ Pro forma(1) US modular leasing revenue up 8.0% 549 year over year and supportive of our expected $400M 484 wth run rate exiting 2019 Gro oY %Y 15.1 ▪ Pro forma(1) monthly rental rates up 15.1%
Slide 9: VAPS Revenue Growth > $140 Million Over Next 3 Years is Achievable
VAPS Revenue Growth > $140 Million Over Next 3 Years is Achievable VAPS Monthly Rate(1) VAPS Future Revenue Potential(1) US$ 91.2K 12 Units(1) x $134 x mo. = $146M d Delivere p 2 0% Rates u Yo Y $134 $284 284 236 • Delivered VAPS rates up 150 $150 20% year over year in Q3 125 2019 across the combine
Slide 10: Diverse End Markets Are Stable And Support 2020 Run-Rate
Diverse End Markets Are Stable And Support 2020 Run-Rate ARA Rental Industry AIA Consensus Construction Forecast(2) Revenue Forecast(1) ABI Architectural Billing index (ABI) has remained Overall above 50 for 8 of the last 12 months averaging 50.5 nonresidential Commercial Industrial Institutional 4%
Slide 11: Financial Review
WILLSCOT Financial Review
Slide 12: Strong Q3 Organic and Inorganic Growth
Strong Q3 Organic and Inorganic Growth Revenue (1) (US$m) Adj. EBITDA (1) (US$m) wth th YoY Gr o oY Grow 24.4% 36.8% Y ▪ Revenue of $272.3 million increased 272.3 88.4 218.9 24.6 8.0 24.4% year over year driven by a 34.3% 21.3 64.6 increase in our core leasing and service 6.2 revenue 247.7 197.6 58.
Slide 13: WSC Has Transitioned To Predictable High Margin Lease Revenue
WSC Has Transitioned To Predictable High Margin Lease Revenue Consolidated Pro Forma Quarterly Revenue (1) (US$m) ▪ WSC's Modular Leasing revenue is highly predicable due to average 32 301 month lease durations 270 272 262 266 253 257 255 ▪ WSC transitioned away from sale 246 244 revenue focus in 20
Slide 14: Modular - US Segment Fundamentals
Modular - US Segment Fundamentals As Reported Pro Forma(2) Modular Space(1) Average Units on Rent (in thousands) Modular Space(1) Average Units on Rent (in thousands) 84.5 86.4 84.7 86.1 84.5 86.0 87.0 83.3 86.9 87.0 87.2 86.4 83.3 82.1 82.1 68.0 74.9% 73.2% 75.3% 72.4% 74.8% 70.6% 73.9% 74.1% 71.8%
Slide 15: Modular – US Segment Quarterly Performance
Modular – US Segment Quarterly Performance Revenue (1) (US$m) 274 ▪ Modular - US segment revenue increased 25.4% to 241 76 239 248 $247.7 million as compared to $197.6 million in the 233 233 231 220 223 219 198 137 108 prior year quarter 122 119 97 111 ▪ Modular space monthly rental rates increased
Slide 16: Modular – Other North America Quarterly Performance
Modular – Other North America Quarterly Performance Revenue (1) (US$m) Modular Space AMR / UOR (1) (US$) 29 30 29 26 13 27 27 25 16 25 13 24 24 25 14 6 13 12 603 618 576 573571 587581 564 557 555 557 552 534 536 541 546 530 527 16 27 24 24 25 21 17 12 12 13 13 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q Q1 Q Q Q Q Q
Slide 17: Reconciliation of Non-GAAP Measures – Adjusted EBITDA
Reconciliation of Non-GAAP Measures – Adjusted EBITDA Three Months Ended September 30, Explanation of Reconciling Adjustments Consolidated Adjusted EBITDA(1) Reconciliation 2019 (US$ in thousands) Total Net Income $ 762 Income tax benefit (1,220) Loss from continuing operations before income taxes (
Slide 18: Synergy Realization and Cost to Achieve
Synergy Realization and Cost to Achieve Synergy Run Rate Integration & Restructuring Costs(1) Real Estate Proceeds/ PP&E Acquired US$m 96 28 75 71 71 1 62 21 40 ~70% 74 ~90% 30 27 realized incurred/ 68 50 in Q3 expended 13 Original Current Original Current Original Current Real Estate Acquired Expec
Slide 19: Transition To Consistent Free Cash Generation Remains On Track
Transition To Consistent Free Cash Generation Remains On Track Net Cash Provided By Operating Activities US$m ▪ Net cash provided by operating activities is up $83.5 44.8 million year to date vs. 2018 39.0 ▪ Operating cashflow expected to ramp meaningfully 21.6 headed into 2020 due to: 15.3 14.0 4.8
Slide 20: Debt Structure Provides Significant Flexibility
Debt Structure Provides Significant Flexibility Carrying value outstanding at (in thousands, except rates) Interest rate Year of maturity September 30, 2019 2022 Secured Notes 7.875% 2022 $ 293,530 2023 Secured Notes 6.875% 2023 482,344 Unsecured Notes 10.000% 2023 — US ABL Facility Varies 2022 897,
Slide 21: Maintaining the 2019 Outlook from Q2 and Run-Rate Expectations for 2020
Maintaining the 2019 Outlook from Q2 and Run-Rate Expectations for 2020 Maintaining Expectation for $400M Adj. EBITDA(1) Run Rate and 35%+ Adj EBITDA Margin(1) Exiting 2019 Updated Outlook Total Revenue $1.05 - $1.10 billion Adjusted EBITDA(1) $355 - $365 million Net Capital Expenditures (after rent
Slide 22: Upcoming Reporting Changes For Q4'19
Upcoming Reporting Changes For Q4’19 • WSC will exceed total revenue and market capitalization thresholds, resulting in a transition from Emerging Growth Company (“EGC”) status to Large Accelerated Filer (“LAF”) status in Q4’19 • Along with our greater scale, technical implications to WSC of becomin
Slide 23: Compelling Specialty Rental Growth Platform
Compelling Specialty Rental Growth Platform ü Market Leader with Significant Scale Advantages ü ü Diverse Product Proven and Experienced Offering, Industry Veteran End-Markets and Management Team Customer Base ü ü Track Record Attractive Unit Delivering on Organic Economics on Long- and Inorganic Gr
Slide 24: Appendix
WILLSCOT jp delitelbs
Slide 25: Summary P&L, Balance Sheet & Cash Flow Items
Summary P&L, Balance Sheet & Cash Flow Items Key Profit & Loss Items Three Months Ended September 30, 2019 Three Months Ended September 30, 2018 Modular - Other Modular - Other (in thousands, except rates) Modular - US North America Total Modular - US North America Total Leasing and Services Modular
Slide 26: 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, net interest expense, depreciation and amortization adjusted for non-cash items considered non-core to business operations including net currency (gains
Slide 27: Summary Consolidated Supplemental Pro Forma Financial Information
Summary Consolidated Supplemental Pro Forma Financial Information Pro Forma(a) Combined Three Months Ended Three Months Ended September 30, September 30, 2019 vs. 2018 (in thousands) 2019 2018 $ Change % Change Revenue $ 272,340 $ 300,616 $ (28,276) (9.4)% Net loss (a) $ 762 $ 14 $ 748 Other Financi
Slide 28: Reconciliation of Non-GAAP Measures – Pro Forma Adjusted EBITDA
Reconciliation of Non-GAAP Measures – Pro Forma Adjusted EBITDA Pro Forma Combined Three Pro Forma Combined Months Ended Nine Months Ended (in thousands) September 30, 2018 September 30, 2018 Historical WillScot net income (loss) $ (36,729) $ (43,185) Pre-acquisition ModSpace net income (11,462) (a)
Slide 29: Reconciliation of Non-GAAP Measures – Adjusted EBITDA Margin %
Reconciliation of Non-GAAP Measures –Adjusted EBITDA Margin % Adjusted EBITDA Margin is a non-GAAP measure defined as Adjusted EBITDA divided by Revenue. Management believes that the presentation of Adjusted EBITDA Margin % provides useful information to investors regarding the performance of our bu
Slide 30: Reconciliation of Non-GAAP Measures – Adjusted Gross Profit
Reconciliation of Non-GAAP Measures –Adjusted Gross Profit Adjusted Gross Profit is a non-GAAP measure defined as gross profit plus depreciation of rental equipment. Management believes that the presentation of Adjusted Gross Profit provides useful information to investors regarding the performance
Slide 31: Reconciliation of Non-GAAP Measures – Net CapEx
Reconciliation of Non-GAAP Measures –Net CapEx Net Capital Expenditures ("Net CAPEX") is defined as capital expenditures for purchases and capitalized refurbishments of rental equipment and purchases of property, plant and equipment (collectively "Total Capital Expenditures"), reduced by proceeds fr
Slide 32: Reconciliation of Non-GAAP Measures – Free Cash Flow
Reconciliation of Non-GAAP Measures – Free Cash Flow Free Cash Flow is a non-GAAP measure. Free Cash Flow is defined as net cash provided by operating activities, less purchases of, and proceeds from, rental equipment and property, plant and equipment, which are all included in cash flows from inves
Slide 33: Capital Structure as of September 30, 2019
Capital Structure as of September 30, 2019 Outstanding as of September 30, 2019 Class A Common Shares 108,751,354 Class B Common Shares(1) 8,024,419 Total Common Shares 116,775,773 Remaining Share Equivalents Authorized Under the WillScot Incentive 3,624,097 Stock Plan(2) Shares Underlying 2015 Warr